07 August 2025
With an eye on making the loan book robust, the IPO-bound Hero FinCorp Ltd (HFCL) has stopped giving unsecured loans due to concerns about overleveraged borrowers. It will recalibrate the balance sheet with focus on secured assets and growth disbursements by 14 per cent in the current financial year (FY26).
Abhimanyu Munjal, managing director and chief executive officer (CEO), HFCL, told Business Standard, the finance company has made a lot of changes in business strategy and operation.
“We have stopped unsecured loans. In unsecured space, we are doing it through partners and an open market. We have stopped because of overleverage issue that was happening in the market. The company thought it was better to focus on existing customers and work in loan against property, home loans, vehicles etc,” Munjal added.
According to rating agency Crisil’s analysis, the company’s steps like strengthening credit underwriting and investments in analytics to improve collections in prior years had helped to reduce bad loans from 7.9 per cent in March 2022 to 4.3 per cent in March 2024.
However, due to challenges like elevated average indebtedness plaguing the unsecured personal loan segment, the overall gross non-performing assets (GNPAs) inched up to 5.0 per cent at the end of December 2024. The share of unsecured personal loans constituted 30 per cent of the assets under management (AUM) as of December 31, 2024, Crisil said. Its GNPA’s further moved up to 5.5 per cent in March 2025, according to HFCL’s annual report.
As for growth in loan book, Munjal said “we are seeing that there is muted credit growth in the whole industry. I am fairly certain we should maintain industry or upwards of industry.’’
This year is about re-engineering the balance sheet to make it very robust so that the company can begin to push for growth from the second half of the current financial year.
“We have so far recorded 14 per cent year-on-year (Y-o-Y) growth in Q1FY26. We will maintain similar kind of disbursements. The early indicators of monsoon are positive. And for us, a lot of our vehicle growth comes in the post-monsoon festive season,” he said.
It had disbursements of ₹30,337 crore in FY25, down from ₹32,145 crore in FY24. Its outstanding loans stood at ₹49,876 crore at the end of March 2025, according to the annual report for FY25.
Asked about benefits from softening of interest rates in raising funds, he said around 55-60 per cent of liabilities is term loans. The marginal cost of funds based lending rate (MCLR) has not come down dramatically. The major component of MCLR is deposit cost and it takes time for MCLR to come down. “We have proactively moved to shorter term MCLRs where we are going to see the benefits,’’ he added.
The external benchmark lending rates (EBLR) on loans have come down. The share of EBLR-linked loans is very small, maybe 10-15 per cent of bank borrowing. There, the company has seen a benefit, he said.
With an eye on making the loan book robust, the IPO-bound Hero FinCorp Ltd (HFCL) has stopped giving unsecured loans due to concerns about overleveraged borrowers. It will recalibrate the balance sheet with focus on secured assets and growth disbursements by 14 per cent in the current financial year (FY26).
Abhimanyu Munjal, managing director and chief executive officer (CEO), HFCL, told Business Standard, the finance company has made a lot of changes in business strategy and operation.
“We have stopped unsecured loans. In unsecured space, we are doing it through partners and an open market. We have stopped because of overleverage issue that was happening in the market. The company thought it was better to focus on existing customers and work in loan against property, home loans, vehicles etc,” Munjal added.
According to rating agency Crisil’s analysis, the company’s steps like strengthening credit underwriting and investments in analytics to improve collections in prior years had helped to reduce bad loans from 7.9 per cent in March 2022 to 4.3 per cent in March 2024.
However, due to challenges like elevated average indebtedness plaguing the unsecured personal loan segment, the overall gross non-performing assets (GNPAs) inched up to 5.0 per cent at the end of December 2024. The share of unsecured personal loans constituted 30 per cent of the assets under management (AUM) as of December 31, 2024, Crisil said. Its GNPA’s further moved up to 5.5 per cent in March 2025, according to HFCL’s annual report.
As for growth in loan book, Munjal said “we are seeing that there is muted credit growth in the whole industry. I am fairly certain we should maintain industry or upwards of industry.’’
This year is about re-engineering the balance sheet to make it very robust so that the company can begin to push for growth from the second half of the current financial year.
“We have so far recorded 14 per cent year-on-year (Y-o-Y) growth in Q1FY26. We will maintain similar kind of disbursements. The early indicators of monsoon are positive. And for us, a lot of our vehicle growth comes in the post-monsoon festive season,” he said.
It had disbursements of ₹30,337 crore in FY25, down from ₹32,145 crore in FY24. Its outstanding loans stood at ₹49,876 crore at the end of March 2025, according to the annual report for FY25.
Asked about benefits from softening of interest rates in raising funds, he said around 55-60 per cent of liabilities is term loans. The marginal cost of funds based lending rate (MCLR) has not come down dramatically. The major component of MCLR is deposit cost and it takes time for MCLR to come down. “We have proactively moved to shorter term MCLRs where we are going to see the benefits,’’ he added.
The external benchmark lending rates (EBLR) on loans have come down. The share of EBLR-linked loans is very small, maybe 10-15 per cent of bank borrowing. There, the company has seen a benefit, he said.
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