L&T Finance , a leading non-banking financial company, has announced a strategic partnership with Google Pay, marking another significant step in its digital expansion strategy. This collaboration will enable eligible users to apply for and access personal loan products directly through the Google Pay app, streamlining the borrowing process and potentially reaching a wider customer base.

Strengthening Digital Presence

The partnership with Google Pay is part of L&T Finance's ongoing efforts to diversify its product offerings and expand credit access through digital channels. This move follows similar collaborations with other prominent fintech platforms, including PhonePe, CRED, and Amazon Pay, underlining the company's commitment to embracing digital innovation in financial services.

Impressive Growth in Personal Loan Segment

L&T Finance has reported robust growth in its personal loan portfolio:

The company attributes this impressive growth to several factors:

• Strategic partnerships with digital platforms
• Geographical expansion initiatives
• Strong focus on customer retention

Implications for Users and the Company

For Google Pay users, this partnership means enhanced convenience and potentially quicker access to personal loans. They can now explore, apply for, and potentially secure loan products without leaving the Google Pay app ecosystem.

From L&T Finance's perspective, this collaboration represents an opportunity to tap into Google Pay's vast user base, potentially accelerating its customer acquisition in the personal loan segment. By leveraging Google Pay's technology and reach, L&T Finance aims to further solidify its position in the competitive digital lending landscape.

Looking Ahead

As the financial services sector continues to evolve with technology, partnerships between traditional lenders and fintech platforms are becoming increasingly common. L&T Finance's strategy of collaborating with multiple digital platforms demonstrates its adaptability and commitment to meeting customers where they are – on their smartphones.

While the company has shown strong growth in its personal loan segment, it will be interesting to see how this new partnership with Google Pay contributes to L&T Finance's performance in the coming quarters. As the digital lending space becomes more crowded, such strategic alliances may prove crucial for sustained growth and market relevance.

L&T Finance , a prominent player in India's financial services sector, has received a significant boost to its creditworthiness as S&P Global Ratings upgraded the company's credit ratings. This upgrade comes as part of a broader action affecting several Indian financial institutions following an improvement in India's sovereign credit rating.

Long-Term and Short-Term Ratings Improved

S&P Global Ratings has raised L&T Finance's long-term issuer credit rating to 'BBB' from 'BBB-', with a stable outlook. Simultaneously, the short-term issuer credit rating has been upgraded to 'A-2' from 'A-3'. These upgrades reflect an enhancement in both the company's long-term and short-term creditworthiness assessments.

Rationale Behind the Upgrade

The rating agency's decision is rooted in several key factors:

1. Improved Economic Conditions: S&P expects India's sound economic fundamentals to support growth momentum over the next two to three years.

2. Monetary Policy: The agency notes that monetary policy settings have become increasingly conducive to managing inflationary expectations in India.

3. Structural Improvements: The Indian financial sector is benefiting from structural improvements, such as enhanced recovery of bad loans.

4. Company-Specific Factors: For L&T Finance, S&P revised upwards its assessment of the company's stand-alone credit profile (SACP) to 'bbb-' from 'bb+', reflecting expectations of maintained strengthened capital levels over the next 12-24 months.

Financial Outlook

S&P Global Ratings provided insights into L&T Finance's financial prospects:

• Risk-Adjusted Capital (RAC) Ratio: The agency estimates L&T Finance's RAC ratio will be 15%-20% over the next two years, benefiting from improving economic conditions in India. As of March 31, the RAC ratio stood at 19.70%.

• Risk Profile: L&T Finance's risk profile is expected to improve as the company shifts toward more diversified retail lending.

• Credit Costs: While improving, credit costs are likely to remain on the higher side compared to some rated peers, given the company's focus on loans to more vulnerable borrowers.

Strategic Importance

The stable rating outlook reflects S&P's expectation that L&T Finance will continue to benefit from being part of the Larsen & Toubro group. The company's linkages with the strong Larsen & Toubro brand are expected to help solidify its market position and access to preferential funding sources while maintaining a good capital position over the next two years.

Broader Context

This upgrade is part of a larger action by S&P Global Ratings, which upgraded 10 Indian financial institutions following a similar action on India's sovereign credit rating. The agency raised India's rating to 'BBB/Stable/A-2' from 'BBB-/Positive/A-3', citing the country's sound economic fundamentals and sustained fiscal consolidation.

The credit rating upgrade for L&T Finance underscores the company's improving financial health and its strategic importance within the Larsen & Toubro group. It also reflects the positive outlook for India's financial sector amidst favorable economic conditions and regulatory improvements.