PNB Home Finance
Shaji Varghese, Business Head at PNB Housing Finance, explains the progress in the business and its drivers:
Shaji Varghese: The end users in housing sector are enjoying a fresh breeze of affordability. With an array of government led initiatives, affordable housing is set to be the growth driver of the housing finance industry. PNB Housing is contributing in a modest way, towards making the mission of ‘Housing for All’ and affordable housing a success. During the year, the company disbursed retail home loans worth `114.83 billion. Almost 20% of this comprises loan size less than `2.5 million. Backed by healthy demand for affordable housing in tier 2&3 cities, PNB Housing’s affordable housing loan book size grew by an overwhelming 62%. We expect this contribution to get bigger as we penetrate further into smaller cities.
We opened 16 branches in FY2016-17 and wishes to continue the expansion plan.
What innovative ways have you employed for affordable housing in 2017-18?
We designed a special home loan scheme - Unnati - for the aspiring communities residing in tier 2&3 cities, and suburbs of metro cities. For loans up to 25 lakhs, the interest rates offered are very competitive. We have fixed and floating interest rates starting at 8.5%. Under this scheme, salaried and self-employed customers can apply for a loan amount of up to `25 lakhs and can take loan up to 90% of the property’s market value. PNB HFC has further aligned its sourcing and underwriting capabilities to efficiently cater to this segment. For instance, Unnati home loan scheme offers option of fixed rate interest for 3, 5 and 10 years to shield the beneficiaries of this scheme from market fluctuations.
What technological up-gradations have you introduced in recent times?
PNB Housing has adopted the power of technology to provide added convenience to its customers. The company launched a self-service customer portal aimed at providing real-time updates to new as well as existing customers. New customers can get preliminary sanction basis the information provided. Besides important information such as IT certificates, EMI payment schedules, etc, the portal also informs the customers about latest offers, new features, etc. Additionally, we also launched a mobile app of customer service portal where in customers can now easily access their account details and avail various services at their fingertips.
Please state the NPAs with regard to housing loans of your company in 2016-17? What are the risk management practices of your company?
The company’s gross NPA stood at 0.22% of the loan assets as on 31st March 2017. PNB Housing recognizes that sound risk management is a key to long-term operational and financial stability. It has a well-established risk-management structure which has significantly contributed to the loan portfolio. The company’s subject matter experts possess extensive knowledge of their geographies which enables them to assess customer’s requirements and offer them solutions within the broad framework of credit policies. Moreover, the streamlined credit underwriting, monitoring and collection process has ensured that PNB Housing’s NPA is amongst the lowest in the industry.
Do you have any suggestions with regard to recent regulatory provisions/issues?
Government has taken up many measures during the year that have inducted substantial positivity in the sector. One of the biggest is the decision to bestow infrastructure status on the affordable housing segment in the Union Budget of 2017-18. Other reforms such as ‘Housing for All’ by 2022, the Real Estate Regulatory Authority (RERA), and GST are expected to transform realty in the days ahead. However, appropriate implementation will play a very important role in the success of these reforms.
What is short to medium term outlook for the home loans for affordable housing in 2017-18?
We are certainly seeing green shoots across the country in all geographies. Tier 2&3 cities are expected to drive real estate demand backed by initiatives such as Smart Cities Mission, Housing For All, etc. A big portion of the affordable housing demand is driven by tier 2&3 cities and suburbs of tier 1 cities.
Shaji Varghese expects tier 2&3 cities to drive real estate demand in the country