Mahindra & Mahindra Financial Services, a non-banking financial company focused on the semi-urban and

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rural markets, has over Rs 10,000 core of assets under management, and 440 branches spread across the country. The company has applied with the Sebi to enter the mutual fund business. In an interview with

Rajesh Abraham, firm’s MD Ramesh Iyer, says the company is confident of launching the business in financial year 2011. Excerpts:

What is the status of the MF application?

As far as mutual fund is concerned, our application is with Sebi. Once the clearance from Sebi is received, only then the next step will be taken in terms of getting into the business. We are keen to get into the business because we think we would be able to bring more investors from the geography that we represent – the semi-urban and rural geography, apart from participating in the urban centres. We are confident that in 2010-11, we should be getting into this business.

Some of your peers such as L&T Finance went out and acquired an existing mutual fund. Is acquisition an option for you?

As a financial services company, at least, we believe in going step by step and building it ourselves. Our strength is our brand name. Our strength is the large customer base we have. We are trying to build investors from a new market – the semi-urban and rural markets. Therefore, we are not in a hurry to buy and get into a business. By buying a business, you may be shrinking the time by maybe six months or so. We are not in that kind of a hurry.

Are you ruling out acquisition?

I should think so. At least, that is not in our mind as of today, unless something substantially changes in the marketplace, which I’m not aware of. We, as a company, keep visiting new opportunities, new strategies and new directions. But, today, if you ask me, we have applied with Sebi and we are waiting for a clearance.

What is the status of the gold-backed lending scheme?

We are opening our branch in Kerala soon. That’s one business we are excited about. That’s one business where the assets are with the lender, unlike any other business of lending. If you give a housing loan, the house is still with the borrower, similarly, in auto finance, the vehicle is still with the borrower. Gold is with the lender. What can be more secure than that? Gold by itself is a very easily tradable commodity. And invariably, people borrow against it for a very short time. But for a company like ours, which has nearly Rs10,000 crore balance sheet, loan against gold will not be a game-changer.

The product is being targeted at the Southern markets?

The South and the West. It is because traditionally, these markets used the products for temporary borrowing. These markets had the chit funds, or the cooperative movement in states like Maharashtra where people are used to this kind of small, temporary borrowing against assets.