Five-Star eyes entry into affordable housing segment during H2 of this fiscal
D Lakshmipathy, Chairman and Managing Director of Five-Star
| Photo Credit:
cueapi
Chennai-based non-banking financial company, Five-Star Business Finance Ltd is considering a foray into the affordable housing segment, with plans to launch the initiative organically in the latter part of the third or fourth quarter of the current financial year.
“We’ve been actively evaluating affordable housing for some time now. The segment is highly complementary to our existing mortgage loan offerings for both business and non-business customers,” said D Lakshmipathy, Chairman and Managing Director of the company, during its Q4FY25 earnings call.
The company aims to leverage its distribution network—comprising approximately 7,000 employees across business and collections functions, and over 750 branches, primarily concentrated in southern India—to support its entry into the new segment.
“This gives us a clear runway to launch this product, which we’ve been planning and considering for quite some time,” he added.
The NBFC currently provides loans for business expansion, home renovation or improvement, and other mortgage-related purposes such as marriage, education, and emergency needs.
loan book
At present, the majority of its loans—around 60 per cent—are utilised for business-related purposes. Another 25 per cent of the portfolio supports housing needs, such as home construction or property purchases. The remaining 15 per cent is allocated to personal consumption, including medical emergencies, education, and other high-cash-outlay requirements.
In terms of collateral, the firm follows a strong asset-backed lending model. Approximately 95 per cent of its loans are secured by self-occupied residential properties. The remaining 5 per cent are primarily backed by commercial properties owned by borrowers, with a small portion—around 1 per cent—secured against vacant land.
Commenting on recent move by the Tamil Nadu government, which introduced a Bill aimed at preventing coercive loan recovery practices, Lakshmipathy stated that the impact is expected to be far less severe than what was experienced in Karnataka following a similar regulatory development. “We are fully prepared in Tamil Nadu. This is our home State, and we’ve been operating here for over 40 years. The situation is completely under control,” he said.
He clarified that, according to the initial draft, the ordinance explicitly excludes regulated entities such as banks and non-banking financial companies (NBFCs), including Five-Star. “That’s where our confidence stems from. While there may be minor disruptions, they will not mirror the intensity seen in Karnataka,” he added.
Published on May 9, 2025
