The International Finance Corporation is to pick up a 20% stake in the Rs.500 million equity Sundaram Home Finance.
Sundaram Home Finance is an offshoot of Sundaram Finance’s retail financing activities. The company is into the business of truck financing as well as car financing. A scheme for financing two-wheelers is also on the anvil. Sundaram also operates mutual fund. Besides, the company has also tied up with United India Insurance for insuring the property to be financed at a low premium. This cover will be available for the mortgaged property for the entire tenure of the loan.
The venture into home finance seems to be an offshoot of two reasons: one the squeezing margins in the truck financing and competition in the car finance. And the increasing demand for housing with the tax benefits available for interest payable on the housing loans.
Sundaram seems to be following the HDFC route for becoming an integrated finance house. Perhaps the only business they have not ventured into is to set up a full fledged commercial bank.
Though housing is also becoming a competitive business the brand equity of Sundaram will help to garner business particularly down South
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