RBL Bank eyes 5.1% interest margin, to launch CV and used car loans, targets growth in smaller cities
RBL Bank is targeting higher net interest margins (NIM) from its retail business by expanding its share of higher-yielding assets, including a foray into commercial vehicle (CV) financing and used four-wheeler loans in the next three months, a top executive said.
Kumar Ashish, head of retail assets and collections, said the private sector lender is looking to grow its retail book by tapping into underpenetrated tier-II and III markets, while maintaining the secured retail portfolio at around 31% of total loans. The bank currently has a network of 550 branches and over 1,500 business correspondent outlets.
Ashish did not disclose retail-specific NIMs or targets but said the bank-level aim is to expand NIMs to 5.1%.
In Q4 FY25, RBL Bank's overall NIM had narrowed to 4.89% from 5.45%, contributing to a sharp 76% drop in quarterly net profit to Rs 86 crore, according to PTI.
The upcoming CV lending product will target customers slightly below the prime segment to improve spreads, and the bank will use its tractor financing team to support CV loan distribution in smaller towns, Ashish said. A used-car loan offering is also in the works, with a focus on digital partnerships with car resale portals to enable instant financing options.
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'We would have to gain market share in order to grow,' said Ashish, who joined recently from Aditya Birla Capital, quoted PTI.
In home loans, RBL Bank will focus on the affordable housing segment. Ashish emphasised that the lender will leverage digital underwriting tools and faster turnaround times to serve niche borrower groups overlooked by larger rivals.
To keep costs under control, branch staff focused on liabilities will now take on credit responsibilities as well, Ashish added.
On the microfinance (MFI) front, which has seen stress due to political headwinds, Ashish said collections have been improving steadily since bottoming out in December. He expressed optimism about a stronger performance in the second half of FY26.
He said RBL Bank is reducing exposure in politically sensitive regions like Tamil Nadu and Karnataka but has minimal exposure in Bihar, which heads to polls soon.
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