Asset quality deterioration seasonal and linked to strategic wind down of consumer lending, says CIFCL

D Arul Selvan, President and Chief Financial Officer, CIFCL

Cholamandalam Investment and Finance Company Limited (CIFCL) reported weakened asset quality during the September 2025 quarter, attributed to prolonged monsoon conditions and strategic refinements in its consumer lending portfolio, according to Arul Selvan, President & CFO.

Despite posting 20% year-on-year growth in both revenue and profits for Q2 FY26, the sequential decline in asset quality emerged as a notable concern.

CIFCL cited seasonal challenges in vehicle financing during monsoon months, which typically disrupt earnings for small transport operators. “Q2 consistently presents elevated credit cost pressures,” Selvan noted, adding that anticipated improvements in economic activity during festive seasons are expected to stabilize portfolio performance.

The company’s deliberate downsizing of its Consumer and Small Enterprise Loans (CSEL) division—specifically its withdrawal from fintech collaborations—also contributed to rising non-performing assets. Current gross NPAs stand at 4.57% (September 2025) versus 4.29% in June, while net NPAs increased to 3.07% from 2.86% during the same period.

Selvan highlighted dual advantages from recent GST reductions: stimulating vehicle investments while simultaneously boosting rural consumption and transport revenues through enhanced goods movement.

The Murugappa Group subsidiary maintains diversified operations across vehicle financing, home loans, SME lending, mortgages, and recent gold loan offerings. With Assets Under Management (AUM) expanding 21% year-on-year through September 2025, management remains confident in achieving its FY26 AUM growth target of 20-23%.

H1 FY26 net profits reached ₹2,291 crore, reflecting 20% growth compared to the previous fiscal year’s corresponding period.

Published on November 7, 2025