A recent press report said that Dhanlaxmi Bank, as a part of its strategy has planned to focus on the self employed rather than salaried class to increase its retail portfolio especially home loans.
According to Mr. Arvind Halli, Head – Retail Assets and Credit Card, Dhanlaxmi Bank, though the self employed customers seem more risky than salaried class lending to them would offer more opportunity for cross – selling of products.
The logic behind this plan is that the Loan to Value ratio (share of bank credit as part of the property price) is often lower than salaried customer.
LTV is usually as high as 70 – 80 per cent for a salaried customer whereas that for a self employed customer it would be about 60 per cent, as they would bring in a large amount of their own equity.
Further, the bank could also build relationship with their self employed customers by cross – selling other products such as commercial vehicle loan or current accounts.
Mr. Halli, in his statement said that mortgages, commercial vehicles and gold loans each have equal share within the retail portfolio. The share of gold loans within the retail portfolio including home loan, car loan, personal loans etc. might reduce to 15-10 per cent when more focus is on mortgages and commercial vehicle.