RBL Bank aims for 60% retail secured loans by expanding portfolio in tier-3 and tier-4 cities

RBL Bank aims to increase the share of retail secured loans to 60% of its total retail loan portfolio. The mid-sized private sector lender is also expanding its portfolio in collateral-backed products such as micro loans against property by leveraging digitised land records, self-employed mortgage loans, affordable housing loans, vehicle finance, gold loans, and MSME business banking, officials said.

RBL’s strategy is to tap underserved customer segments and strengthen its presence in Tier-3 and Tier-4 cities, markets that bigger private banks are not pursuing aggressively.

“If we can identify micro-segments that yield even a few thousand crores, it’s good business for us,” Kumar Ashish, head, retail assets and collections at RBL Bank told ET in an interview. “The idea is to grow secured retail while keeping operational costs in check. We are exploring digital solutions for valuation, legal processes, and charge creation, and evaluating collateral types that larger banks haven’t tapped so far.”

Loans against property would range from Rs 5 crore at the upper prime end to Rs 10 lakh in the lower micro segment. Likewise, working capital and term loans aimed at MSME customers would range from Rs 50 lakh to Rs 25 crores.

RBL, which already offers tractor financing across more than 300 districts, now plans to leverage this network to grow its two-wheeler and small commercial vehicle financing business.

“While the industry will grow at 13–15%, we can create a sustainable 20% growth year-on-year,” said Ashish. “With the customer segments that we are focusing on, our yields will get better. We also want to calibrate our retail book to 60% secured from the current 54.65%, with the remainder continuing to be unsecured.”

Ashish added that RBL’s 550 branches, earlier focused primarily on deposits, are now being used to drive mortgages and business loans. Similarly, its 1,500-strong business correspondent network, once focused mainly on microfinance customers, is being deployed to expand to other segments, especially micro-LAP and gold loans.

As of June, RBL Bank’s total advances stood at Rs 94,431 crore, with secured retail loans accounting for Rs 30,946 crore and unsecured loans at Rs 25,679 crore. The bank’s deposit base was Rs 1.12 lakh crore, comprising Rs 76,120 crore in current accounts, Rs 18,907 crore in savings accounts, and the remainder in term deposits.

Meanwhile, RBL is also sharpening its focus on an asset-led liabilities model, under which it is increasing the distribution of asset products through its branch network. In the June quarter, the bank sourced loans worth Rs 1,136 crore through its branches, up from Rs 410 crore in the same period last year, a more than twofold growth. These loans were in the business banking and mortgage category.

“We will build liabilities through these asset customers,” said Narendra Agarwal, head, retail liabilities and branch banking at RBL Bank. “Our granular deposits (below Rs 3 crore) have grown at a 20% compounded annual growth rate over the last two years. If we can reduce our cost of funds by improving the CASA ratio, we can be more competitive on asset pricing and distribute more loans through our branches.”

The lender is also planning to add 210 branches over the next three years, taking its total branch count to 770.