GE Money, the consumer finance arm of the diversified global giant General Electric Co, will soon raise its profile in the Indian home loan industry, aiming to ride an increasingly sophisticated mortgage business with 25 to 30 per cent annual growth. It is also open to the idea of acquisitions.
“In the next three to six months you’ll start to see us advertising,” Vishal Pandit, the president and chief executive officer for GE Money’s India unit, told Hindustan Times. He said mortgage loans secured against property would also help GE balance its relatively higher risk portfolio in consumer durables finance where it is an industry leader with a 43 per cent market share.
“We are always looking at acquisitions. But they must make sense economically,” Pandit said.
GE Money, which in 2005 became a conscious brand after years as a back-end credit card service provider for retailers and partners, has been steadily growing its mortgage business worldwide. The share of mortgages rose from around 5 per cent of the overall consumer lending business in 2002 to about 30 per cent last year, Pandit said.
In India, GE Money must face entrenched players like HDFC, ICICI Bank and others to become a strong mortgage lender, but Pandit said his company was on strong ground because it aimed to enter and lead more sophisticated, higher risk work like second mortgages on properties whose market value has risen since the first mortgage.
GE’s lending book in mortgages now has only about $500 million, considered negligible in a developing market of one billion people, but it has an equity capital of around $300 million (roughly Rs. 1,500 crore) that would help GE Money leverage cheap funds for lending.
GE aims to compete on the back of its strong depth in technology-driven risk assessment, where it profiles credit risks and opportunities for lending by using risk management software and high-intensity number crunching that lead to lower risks and higher lending margins.
In India GE has a credit card partnership with the State Bank of India, a joint venture for automobile finance with Maruti and its own consumer financing firm, GE Countrywide. While it is miles away from a dream to acquire a bank like it has in other countries, it is betting on consumer lending and home finance, identified as big opportunities.