Repco Home Finance is a housing finance company that does something deliberately unfashionable: it lends to people banks often overlook - small-business owners, shopkeepers, and salaried workers in India’s tier-2 and tier-3 towns - using a model built on physical branches, direct customer contact, and a deep understanding of irregular cash flows. Incorporated in April 2000 and promoted by Repco Bank, a Government of India enterprise, the company has spent 25 years refining a “touch and feel” approach where branch managers know their borrowers personally, credit decisions blend bureau scores with local intelligence, and the loan book is deliberately split almost evenly between salaried and self-employed customers. That recurring idea - serve the underpenetrated, price slightly below prime competitors, and keep operations lean - explains everything that follows. # Business segments Two lending engines, both secured against property - a home loan book that is the foundation and a loans-against-property book that adds higher yield, funded by a diversified liability franchise and distributed through a branch network concentrated in southern India. ## 1. Home loans: the core mortgage engine for small-town India **Seven out of every ten rupees lent by the company are for buying, building or renovating a home, with an average loan size of about Rs. 14 lakhs - small enough to stay under the radar of large banks, large enough to be profitable when sourced through a low-cost branch network.** - **Split evenly between salaried and self-employed** - 47% of the home loan book comes from salaried customers and 53% from non-salaried borrowers such as small business owners, a mix that is rare among housing finance companies and gives the company access to a less competitive, higher-yielding customer pool. - **Priced between prime and affordable** - the company’s minimum lending rate sits between what top-tier housing finance companies and affordable housing finance companies charge, which makes it “slightly competitive” and drives a steady net inflow of borrowers switching from other lenders. - **Conservative underwriting by design** - the average loan-to-value ratio is kept at about 47% of the property’s realisable value, and every borrower is scored on a dynamic model with over 15 parameters including credit bureau score, so the company lends less against each property than most rivals would. - **The branch manager performs a preliminary appraisal** - a preliminary appraisal is done at the branch level by the manager, valuers and lawyers, then revalidated at the regional office, creating a multi-level check that keeps early defaults low; post-2022 loans have a gross NPA of only about 1%. - **Customer retention through rate cuts** - the company loses about Rs. 35-36 crores a month to balance transfers but gains Rs. 45-50 crores from borrowers switching in, partly because it offers interest rate reductions and top-up loans to good customers, even pricing below its own minimum lending rate for the best ones. ## 2. Loans against property: higher yield on the same collateral **When a customer pledges a home or commercial property for non-housing needs, the company earns a yield of 13.44% - roughly two percentage points more than on home loans - while keeping the portfolio capped at around 25-30% of the total book as a deliberate risk choice.** - **Same property, different purpose** - these are secured loans against residential or commercial real estate used for business expansion, education, or other personal needs, not for buying the property itself. - **A tight leash on size and quality** - the company does not take individual loan proposals above Rs. 3 crores to the Board, and the average ticket size is kept stable even as the portfolio grows, so exposure to any single borrower stays limited. - **Same underwriting rigour as home loans** - the multi-level appraisal, dynamic credit scoring, conservative LTV ratios and external KYC verification for larger tickets all apply here too, which is why the gross NPA on this book is 2.4%, comparable to the home loan book. # Distribution and funding: the shared backbone **A 242-outlet branch network concentrated in Tamil Nadu and neighbouring states sources customers directly, while a diversified borrowing mix - 85% from banks, the rest from NHB refinance, the promoter, and capital markets - funds the loan book at a weighted average cost of 8.35%.** - **Branches in the places others skip** - 119 of the 242 outlets are in Tamil Nadu alone, with the rest spread across 11 other states and one Union Territory, almost all in tier-2 and tier-3 cities where rentals are lower and competition from banks is thinner. - **Direct sourcing dominates** - most customers come through the in-house sales team, walk-ins and referrals; Direct Selling Agents contribute about a third of disbursements, and loan camps run by branch managers every few months generate another large chunk by giving in-principle approvals on the spot. - **Lean branches, lean costs** - each branch runs with just 3-5 employees, commission expenses are capped, and the company also buys loan pools from other originators when the price is right, having done a direct assignment transaction. - **Floating-rate borrowings as a natural hedge** - 99.2% of borrowings are on a floating-rate basis, matching the floating-rate assets, so the company is largely protected when interest rates move. - **Liquidity well above regulatory requirements** - the Liquidity Coverage Ratio stood at 144.4% against a regulatory prescription of 100%, and the Capital Adequacy Ratio was 35.38%, giving the company ample room to grow without raising fresh equity. # Group structure and partners **The company is promoted by a government-owned bank, holds a minority stake in a microfinance associate, and counts several domestic and foreign institutional investors among its shareholders.** - Repco Bank, a Government of India enterprise, is the promoter and a lender to the company, providing Rs. 659 crores in borrowings at 8.50% as of March 2026 and nominating two directors to the Board. - The company holds a 31.85% stake in Repco Micro Finance Limited, an unlisted NBFC-MFI that lends to economically backward women through self-help groups; the investment earned a 12% post-tax return in FY22 and is accounted for using the equity method. - Major non-promoter shareholders include HDFC Mutual Fund (7.2%), Aditya Birla Sun Life Mutual Fund (5.0%), and Fidelity Asian Values LLC (3.1%), alongside other institutional investors.