Microfinancier Creditaccess Grameen, which has been only offering collateral-free loans to women, is entering the secured lending side with home, auto and gold loans along with SME funding, a top company official said on Wednesday.

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The Bengaluru-headquartered NGO-turned microlender, which went public in 2018 with a Rs 400 crore-IPO, is the largest microfinancer in terms of loan book with Assets Under Management (AUM) of Rs 16,540 crore as of September.

On Wednesday, the lender also announced its maiden NCD (Non-Convertible Debenture) issue worth up to Rs 500 crore.

"For the past few months, we've been piloting, on a very low scale, secured lending among our existing customers. We're testing gold loans, auto loans with a focus on two-wheeler funding, home loans along with loan against property and loans to small businesses," Creditaccess Grameen Managing Director and Chief Executive Officer Udaya Kumar told PTI.

He also noted that the effect of these initiatives will be visible in its loan book from the next fiscal.

Over the next five years, the secured book may touch 10 per cent of the AUM and will not and cannot cross 25 per cent of the book since "we want primarily to be a microlender", Kumar said.

Deputy Chief Executive Officer & Chief Business Development Officer Ganesh Narayanan said 50 per cent of the auto book will be for the open market while the other half will be for existing customers. He also sees larger scope for Loan Against Property (LAP), wherein a ticket size of up to Rs 8 lakh can be offered.

Currently, LAP is the biggest secured segment and is offered at all its 1,680 plus branches spread across 333 districts in 14 states, while gold loans are being piloted across a few branches, he added.

The bank is offering an annual coupon rate of up to 10 per cent with an effective yield of up to 10.46 per cent for the public issue of secured, redeemable NCDs. The issue will open on November 14 and close on December 2.

The NCDs will have a tenor of five years.

Kumar said he has the board's approval for raising up to Rs 1,500 crore from NCDs and another approval for raising USD 150 million through External Commercial Borrowings (ECBs) so that it can reach the internal target of having 40 per cent of funds in long term capital.

Currently, around 70 per cent of the funds come from banks, 10-12 percent from international lenders, and 7 percent from securitization and the rest from other sources including developmental institutions like Sidbi and Nabard.

The lender's cost of funds rose by 50 basis points to 9.1 percent during the September quarter and it prices loans on average at 20.5 per cent.

CreditAccess Grameen, which started off as an NGO T Muniswamappa Trust in 1999 and subsequently got converted into a microfinance firm in 2007, employs over 15,660 people. It is majority-owned by the Dutch firm Creditaccess NV that has a 73.74 per cent stake.