Tourism Finance Corporation of India aims to increase its loan sanctions to ₹3,000 crore in FY27, up from ₹2,000 crore in FY26. The company is betting on rising demand for hotel infrastructure in smaller cities, though rising construction costs remain a key hurdle for developers.
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Tourism Finance Corporation of India (TFCI) has announced an aggressive growth plan for the current financial year, targeting ₹3,000 crore in total loan sanctions. This figure represents a notable expansion from the ₹2,000 crore sanctioned in FY26. The company’s management expects its assets under management to reach approximately ₹2,800 crore by the end of FY27, compared to ₹2,200 crore in the previous year.
The core of this strategy involves capitalizing on the growing domestic tourism market. TFCI is specifically allocating ₹500 crore of its new sanctions to support hospitality projects in smaller, emerging cities. According to the company, these locations are seeing increased investment from branded hotel chains that are trying to keep pace with the rising number of business and leisure travelers.
While the demand for hotel rooms is strong, with the country currently adding 15,000 to 20,000 branded rooms annually, the hospitality sector faces significant pressure from rising development costs. Management noted that construction expenses have increased by 15% to 20% due to higher material prices, labor shortages, and supply chain issues. For investors, this creates a potential risk of cost overruns, which could affect the financial health of the projects TFCI funds.
To manage these risks, TFCI has been diversifying its portfolio beyond pure tourism projects. Currently, tourism-related lending accounts for about 50% of the company's loan book. The remaining half is spread across various sectors including residential real estate, which is expected to account for ₹900 crore in lending for FY27, alongside manufacturing, renewable energy, and loans to educational institutions and smaller NBFCs. The company is also looking to expand into data center financing to further diversify its revenue streams.
In the first quarter of FY27, TFCI reported a net profit of ₹61.2 crore, boosted by higher interest income and a one-time income tax refund. Moving forward, the primary factors for investors to monitor will be the execution of these new loans, the impact of high construction costs on the viability of hospitality projects, and the company’s ability to manage its cost of funds as it seeks to grow its loan book across diverse sectors.