December 1, 2023

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Godrej To Enter Non-banking Lending Business


The 124-year-old Godrej group is set to enter the non-bank lending business with its unit Godrej Finance Ltd, a person aware of the matter said. The $4.1 billion conglomerate is expected to make an official announcement in this respect on Monday, the person said on condition of anonymity.

Godrej Finance held a non-banking financial company (NBFC) licence since 1998, when it was known as Ensemble Holdings and Finance; however, it has never been active in the lending space.

Expansion mode

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Expansion mode

The lender, which will have an authorized share capital of 1,000 crore, will start off with non-mortgage loans to small enterprises and loans against property, the person said. It may enter consumer lending later, a space now dominated by Bajaj Finance Ltd.

According to Arvind Singhal, chairman of Technopak Advisors, the financing business will grow for all entities as the economy expands. “Godrej is present in housing finance. It is also present in consumer products, appliances and furniture business. Given the financing opportunities, the group has the capabilities to build a good book. Godrej brand stands for trust and respect, which will also help them expand into the financial services business,” Singhal said.

In October 2020, the group launched Godrej Housing Finance Ltd, which offers mortgage loans of 40 lakh to 1 crore, but only for customers of Godrej Properties Ltd. Its capital adequacy ratio stood at 21.8% as of March 2021, and had a loan book of 1,001 crore as of December 2021.

An email sent to a spokesperson for Godrej Housing Finance remained unanswered.

In July 2021, following a Reserve Bank of India approval, group holding company Godrej Industries Ltd transferred its stakes in its units Godrej Housing Finance and Godrej Finance to Godrej Capital (another subsidiary earlier called Pyxis Holdings), making it the group’s financial holding company.

According to data from the ministry of corporate affairs, Godrej Finance has been engaged in investment and other NBFC activities. Investment activities include dealing in listed and unlisted securities and holding 0.6% of Godrej Properties, it said.

Godrej Industries had signalled its ambition in the finance business last year itself. “The company is looking at expanding and diversifying its business activities. It believes there is a strong potential for housing finance and non-banking finance business in our country with a decent return on investments. The housing finance business in India has been growing at a steady pace. GHFL has recently obtained a licence to operate as a housing finance company and has commenced operations. Looking at the opportunity in the housing finance sector and NBFC business, it is proposed to nurture the finance business under the company’s umbrella, being the flagship firm of the group,” it wrote to stock exchanges on 24 August.

The Godrej group was founded in 1897 when brothers Ardeshir and Pirojsha Godrej opened a lock-making company in Mumbai after failing in earlier ventures. It has since emerged as a global conglomerate.

The group has been going through an ownership shake-up after a family feud cropped up between the two brothers, resulting in the division of the group’s businesses among the next generation of the family.

The group is led by veteran industrialist Adi Godrej (79) as chairman. His brother Nadir Godrej is chairman of Godrej Industries and Godrej Agrovet. Their cousin Jamshyd N. Godrej is chairman of Godrej & Boyce Manufacturing Co. Ltd, whose assets include largely undeveloped land across Mumbai.

Adi’s son Pirojsha runs the listed Godrej Properties, which is developing some of the land owned by Godrej & Boyce, along with other projects across Mumbai. Adi’s youngest daughter, Nisaba, is chair and managing director of Godrej Consumer Products Ltd. Adi’s other daughter, Tanya, is executive director and chief brand officer of Godrej Industries.

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