Anil Ambani group's Reliance Capital [Get Quote] said on Wednesday it has received the necessary regulatory approval to set up a housing finance subsidiary and expects to become a leading player in the home loan business over the next 3-5 years.

Besides the approval by the National Housing Board for setting up the subsidiary, the company has also got the Reserve Bank's nod to set up a non-banking finance company subsidiary for its consumer loan business, which would primarily focus on vehicle loans and lending to SMEs.

Announcing the approvals, Reliance Capital CEO Sam Ghosh told PTI over phone: "In the next three to five years, we would be one among the top players in this field. Following this approval, we would enhance our focus on salaried customers, along with the people in business and entrepreneurs."

When asked if the company would be able to offer loans at cheaper rates in a highly competitive market, Ghosh said, "Rates would be competitively priced as, with this, approval funds would be available at much cheaper rates."

Ghosh added, "While I cannot say that it would be lowest in the country, it would be one of the lowest. Our loan book size as of now is Rs 3,500 crore (Rs 35 billion) and would grow further following the NHB approval," Ghosh added.

Both HFC and consumer finance subsidiaries would be in place in the next two months, and the employees currently working with the related businesses at Reliance Consumer Finance Ltd would be relocated to the new entities, he said.

Reliance Capital is already into the mortgage business through its consumer finance arm. At present, the home finance business is clubbed with the consumer finance business of Reliance Consumer Finance, a wholly-owned subsidiary of Reliance Capital.

"Floating a home finance company will give us the opportunity to participate in the growing housing sector and, at the same time, allows us to assist in building the country's infrastructure through the mortgage business.

"In the consumer finance company, we would focus on asset creation through vehicle loans and loans to the SME sector," Reliance Consumer Finance's Deputy CEO K V Srinivasan said.

"With these approvals, the businesses of consumer finance and home finance will get more focus and we can offer affordable loans for fulfilling consumers' need for home purchase and other asset creation," Ghosh said.

Reliance Capital Limited is the financial arm of the Reliance Anil Dhirubhai Ambani Group.

If a company is regulated by the National Housing Bank, it gets special benefits on issues like refinance, repossession and lower capital adequacy.

A housing finance company is also allowed to raise funds through external commercial borrowings, while a non-banking financial institution undertaking this business does not enjoy such benefits.