Hyderabad: Temasek Holdings Pte Ltd, the investment arm of Singapore government, has committed to invest $150 million (Rs606 crore) more into its wholly-owned Indian non-banking finance company (NBFC) Fullerton India Credit Co. Ltd in two tranches this year and next.

With the help of the fresh capital infusion, Fullerton aims to achieve disbursals

Rural focus: G.S. Sundararajan, MD and CEO of Fullerton India.

“Temasek will pump in $50 million before the current calendar year-end and the balance $100 million by 2008-end," Sundararajan said.

Fullerton is currently focusing mostly on the urban markets that target mass-market customers belonging to the middle- and lower-income segments.

Sundararajan said, sensing huge opportunities in the rural market, Fullerton has taken up an extensive study to evaluate the opportunity.

The study, which commenced a couple of months ago, is to be completed by the end of the year and the company plans to take up rural business initiatives from the next calendar year onwards.

From a network of 325 branches spread across 150 locations today, Fullerton proposes to expand its services in the next 18 months to 500 towns, with each town having at least one branch.

“There is a huge potential for our business in the rural markets, with a large portion of population still not having access to a formal lending system. Going forward, our focus would be largely on the C and D category markets across the country," Sundararajan said.

Kajal Jain, research analyst with online brokerage ICICI direct.com, said: “We are seeing retail credit growth is (slowing down) from 30-35% growth levels for the larger banks to 15%-odd levels now, due to higher interest rates and risk (of bad assets), but small and medium enterprises will still continue their (expansion) run."

But Fullerton, a relatively smaller player, could face pressure from large banks that have benefits of scale in terms of both fund sources and customer base. Sarika P. Lohra, research Analyst with Mumbai’s Angel Broking Ltd, said: “Players such as Fullerton could face heavy competition from banks with huge branch network and cheaper interest rate loans."

Still, Lohra said, NBFCs such as Fullerton have the advantage of better risk management with the relationship-based community-lending model that they adopted for credit disbursals and recovery.