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Financial services firm Religare Enterprises on Wednesday said it will acquire a part of Citigroup India's home loan portfolio for Rs 500 crore (Rs 5 billion), representing 5 per cent of the latter's total mortgage book.
Citigroup clarified that it is very much in the home loan business and has just sold a small portion of its loan-book so that it can lend afresh. The acquisition would be done through the non-banking finance arm Religare Finvest and is expected to be completed by October.
"We have entered into an agreement to acquire part assets of Citigroup India's mortgage portfolio for Rs 500 crore. The deal would be completed in the next three months," Religare Finvest chief executive Kavi Arora told PTI.
He said Religare Finvest has been in the home-loan business for the last three years and the acquisition of key assets of Citi's mortgage business would give it an edge.
The acquisition is the first by Religare Finvest since it started offering loans for SME commercial vehicles and construction equipment in Q3 of 2008.
Citi South Asia chief financial officer Abhijit Sen said, "this sale is of a small pool of mortgages representing less than 5 per cent of our total mortgage portfolio. Citibank routinely sells small tranches of its portfolio to optimise returns on capital and such assets sold are substituted by fresh loan."
Mortgages is a priority business for Citi and a core part of the bouquet of products and services offered to customers, Arora added.
Citi's total mortgage portfolio is Rs 9,000-10,000 crore (Rs 90-100 billion) and its total loan-book is about Rs 40,000 crore (Rs 400 billion).