Repco Home Finance Ltd (RHFL) is set to return to the bond and money markets after a gap of several years, with shareholders approving a fundraise of ₹1,500 crore through non-convertible debentures (NCDs) and ₹1,000 crore via commercial papers (CPs) on a private placement basis.

The move, aimed at diversifying borrowings and lowering funding costs, marks the company’s first major capital market tap since FY18.

The decision to tap the bond market (via NCDs) and the short-term money market (via CPs) stems from the fact that transmission of repo rate cuts into these markets is faster as compared to the loan market. So, the company will benefit from lower borrowing cost.

T Karunakaran, MD & CEO, RHFL, recently told analysts “We are happy to share that we have started diversification of our borrowings. After a very long time gap, we entered the capital market. As an initial step, the company has successfully issued Commercial Paper amounting to Rs.150 crores.”

Shanthi Srikanth, CFO, said: “Our cost of borrowing is consistently reducing,…majority commercial banks have still not passed on the benefit (of repo rate cuts) to us. And we are trying our best to reduce the cost of borrowing by at least diversifying with the NCD market and the PTC (pass through certificates issued under securitisation) market.”

RHFL, which was established in April 2000 by the Repatriates Cooperative Finance & Development Bank (Repco Bank), last tapped the bond market in FY18, when it issued NCDs aggregating ₹652 crores (previous year ₹385 crores).

In FY21, the company repaid NCDs of face value ₹652 crores even as it issued CPs aggregating ₹100 crore. After this CP issuance, it did not tap this route for raising funds.

Over the last couple of years, while other HFCs have been gradually reducing their dependence on Bank funding by tapping the bond markets, RHFL has stepped up its reliance on bank funding.

As of March 31, 2025, 82.9 per cent of the Company’s borrowings were by way of borrowings from Commercial Banks (79.2 per cent as of March 31, 2024), 7.9 per cent by way of refinancing from the National Housing Bank (10.8 per cent), 10.0 per cent from Repco Bank (10.0 per cent).

As at March-end 2025, RHFL’s overall borrowings stood at ₹11,148.02 crore (₹10,698.62 crore as at March-end 2024), with the average tenor of borrowings coming down to 7.85 years from 8.5 years. Its cost of borrowings rose to 8.6 per cent as at March-end 2025 from 8.3 per cent as at March-end 2024.

During Q1FY26, the HFC’s disbursements were up 22 per cent year-on-year (yoy) at ₹829 crore (₹680 crore in the year ago quarter). The overall loan book grew about 7 per cent yoy to ₹14,690 crore as at June-end 2025 against ₹13,701 crore as at June-end 2024. In Q1FY26, RHFL reported a net profit of ₹108 crore (₹105.40 crore).