Housing finance is a large market, and even with multiple players, the need has not been fully met. To cater to this, SHFL has expanded its presence through dedicated emerging-business operations, which cover affordable housing finance and small-ticket loans. Other than Tamil Nadu, it operates branches in Andhra Pradesh, Karnataka, Telangana, Maharashtra, Madhya Pradesh, Rajasthan, West Bengal, and Chhattisgarh.
SHFL has been operating in southern markets for nearly 20 years, with the region accounting for 95 per cent of business in 2017-18. Today, the share has fallen to 82 per cent, with 15 per cent coming from markets outside south. “We operate almost like a separate company in each state, given differences in house prices, financing needs, culture and processes,” points out Lakshminarayanan Duraiswamy, its Managing Director.
Focusing on Smaller Towns
Branch expansion is one part of the story. The other is that SHFL is looking beyond major urban centres and focusing on smaller towns, where demand is growing. With many moving back to their hometowns post-COVID, there is an increase in demand for larger homes and increased investment in land. “The push towards tier 2 and tier 3 has already happened for banks. NBFCs have already been forced to go there. Eventually, tier 2 will become tier 1. More Tier 3s will come in. This is irreversible!” emphasises Lakshminarayanan. Fuelling this is the growth of employment opportunities in these locations, with software companies, Global Capability Centres (GCCs), warehouses and quick-commerce delivery centres expanding into smaller cities and towns.
Assessing customers in these markets calls for a different lens. Many borrowers belong to the informal sector and lack conventional income proof such as ITRs or GST returns. But the scale of this segment is significant. The government’s Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2023-24 estimated 7.34 crore unincorporated establishments employing 12.06 crore workers across manufacturing, trade and services. Lenders, therefore, have to look beyond paperwork like the business they run, cash flows, digital payment trails and even electricity bills. “You have to ask different questions to each person. Understanding the customer is the real trick of the trade,” highlights Lakshminarayanan.
Envisioning Respect and Relevance
With decades of legacy, understanding customers remains at the heart of SHFL’s approach. The company is embracing technology and selectively using AI to respond to evolving needs, while retaining its core values. Its emerging business segment saw disbursements more than double from Rs 229 crore in FY25 to Rs 590 crore in FY26, “Our vision is not about size, but about being relevant and among the most respected housing finance companies,” points out Lakshminarayanan.
