DHFL focus .........................................
Vivek Kannan, COO, DHFL, elaborates on the company’s plans to be an active participant in the ‘Housing for All by 2022’ plan:
N. Mohan: DHFL brings certain values to its customers, based on their individual needs, financial status etc. Can you elaborate?
Vivek Kannan: Over the past 34 years, DHFL has been at the forefront of enabling home ownership dreams of the lower and middle income (LMI) segments in tier 2 and 3 towns. We are securing our customers’ future by actively addressing their financial needs through our diversified product offerings, while creating financial awareness. With an ever expanding focus on financial inclusion and building a stronger ecosystem for tomorrow, we are now reinforcing our commitment towards transforming the lives of the common man. Led by an in-depth understanding of our customers’ affordable housing finance needs combined with our time-tested expertise in this space, we are proud of our mission of ‘Giving India a Home’, which resonates with the government’s national mission of ‘Housing for All by 2022’. Today, we stand strong as an institution that is committed to the mission of ‘Giving India a Home’ and providing financial security to the society it serves.
You are primarily targeting the affordable housing needs of lower and middle income groups, especially in the semi-urban and rural areas. How do you manage to treat these customers differently?
In our endeavor towards supporting an equitable world and driving financial inclusion across India, we have established a wide distribution network across tier II and III towns. This is the real ‘Bharat’ that DHFL is making a deep impact on – with efforts towards giving India a secured future through its common people. As we expand into new territories of growth, we create more touch points through microbranches, ease systems and processes and thus, enhance customer service and experience at every step of their engagement with us. Our deep understanding of our customers’ aspirations enable us to see every limitation as an opportunity. Thus, even as we enhance our product portfolio to meet their affordable housing needs, we simultaneously drive financial awareness. Reinforcing our 34-year-old vision and supporting the national mission, we launched a unique initiative ‘Griha Utsav’, a first-of-its-kind housing expo in tier II and III towns bringing prospective home buyers and developers under one roof to provide affordable housing and finance solutions to our target LMI group. We also effectively leverage a host of digital-centric initiatives to enhance customer experience through reduced turnaround time and improved efficiencies. As an industry thought leader in driving financial inclusion across India, DHFL reinforces its commitment towards enabling equitable and sustainable growth.
How are you placed in terms of the government’s goal of housing for all by 2022? What are the specific programs you are piloting in this regard?
Our powerful affordable housing proposition is pillared on our insightful approach towards meeting the needs of the customer at the base of the pyramid. We create more opportunities for ‘Giving India a Home’ and enable deserving people to live their most cherished moments. In line with this approach, we conceptualized our customer centric initiative ‘Griha Utsav’, which is essentially a platform to connect millions of aspirational LMI home buyers with developers in the affordable housing segment in small towns and locations. We crafted our Jan Awas Home Loans to cater to the affordable housing needs of EWS, LIG and MIG customers, with total ease and convenience, in line with the government’s ‘Credit Linked Subsidy Scheme’ (CLSS) under the Pradhan Mantri Awas Yojana (PMAY). Importantly, in a bid to create a robust platform for enabling homeownership for the India that lives in tier II and III cities, we re-oriented our marketing communications strategy and underwriting policies to make it centered on expanding financial inclusion.
What is your presence in tier II and tier III cities? What is the percentage of business in these locations?
We foresee continued healthy demand from the tier II and III markets. Higher transaction volumes in these markets and fiscal incentives on housing loans along with more options in the affordable housing segment aided robust off-take of the housing finance industry. As I said earlier, we focus primarily on the LMI segment, which
is concentrated in these markets across India, and we have developed a business model and an attractive suite of products to cater to this segment. The business model is designed to focus on this segment in this market. A factor that has helped us stay ahead in the affordable housing sector is our large distribution and localized network in the tier II and III markets. We maintain a pan-India distribution network in over 350 locations, which further services 450+ locations. A significant portion of our current sourcing comes from beyond the major urban centers.
What is the average ticket size of the loans you sanction? How could you avoid NPAs?
Housing finance companies such as DHFL majorly focus on providing affordable housing finance solutions to buy affordable homes which are majorly owned by the first home buyers. Buying a home for the family’s security is a very big decision in the life of an LMI customer and is not a mere investment instrument. Our strong underwriting skills and internal capability on collateral evaluation, including the legal process, further protects and strengthens our asset quality. We have one the lowest NPAs in the industry - our reported Gross Stage 3 Loan Assets (equivalent to Gross NPA%) stand at 0.93%. This is augmented by proprietary indices developed on our internal databases built over the last 3 decades.
What is the performance growth for Q1FY19?
Our committed efforts towards driving financial inclusion have translated into a net profit growth of 35% to `4.35 billion for the quarter ended 30 June 2018. Profit before tax rose by 43% to `6.38 billion for the quarter. Our loan book outstanding grew 32% to `1010.725 billion during the quarter and AUM grew by 37% yoy, reaching ` 1210.31 billion from `884.18.3 billion.
Can you outline the efforts made by the company in creating awareness about financial discipline?
We conduct several educational camps/ activations for potential target customers in tier II and III towns, to demystify home loans and catalyze the realization of the people’s homeownership dreams. We also undertake financial literacy initiatives as part of our CSR programs through various media.
How do you think enactments like RERA have helped the housing finance companies?
The implementation of the RERA reflects the government’s steadfast commitment to bring greater momentum to India’s real estate industry, which contributes very significantly to India’s GDP and is the growth engine for economic development. RERA is extremely beneficial in protecting consumer interests, increasing clarity, ensuring efficiency in property-related transactions, improving accountability of developers, enhancing transparency, boosting consumer confidence. RERA is hence aimed at augmenting governance, strengthening the buyer’s trust, improving flow of credit to developers thus stimulating homebuyers in several ways. Its implementation has been well timed and in due course it will emerge as a strong catalyst to meet the objectives of Housing for All by 2022 primarily addressing the supply side gaps.
Can you talk about technology induction in the company? How has it helped?
DHFL is making significant transformation in its IT infrastructure to leapfrog to the next generation of a scalable and flexible technology landscape. The digital initiatives will usher speed, efficiency in day to day operations and superior analytical insights that will help us design products and services in line with the changing customer requirements. It will also future-proof the organization, enhance customer experience and convenience. This transformational strategy will help us improve productivity, reduce cost and enhance customer experience. We are moving towards becoming a digital assisted customer centric organization. We are creating a unique integrated ecosystem of digital and physical consumer touch points for our customers to seamlessly interact with us in their preferred environment, keeping in mind regulatory needs and building a qualitative asset portfolio.
Can you list the practices you have adopted to make onboarding of customers easy and convenient for them?
There are multiple initiatives which address the needs of providing enhanced customer experience, reduced cost and mitigating operating risk. We have built centralized underwriting hubs in Hyderabad and Mumbai, which work on a scan-based, workflow-driven platform. We have developed capabilities on auto making income documents and bank statement evaluation, including accessing from source. We have adopted a GIS-enabled mobility tool for our field workforce across functions, which acts as productivity enhancer besides reducing turnaround time drastically. We have implemented bureaubased algorithms for verification and fraud detection including being a pioneering HFC in creating score-based decisioning models. Some of the other initiatives include video-based personal discussions, desktop valuations and legal processes aimed at taping increasing digitization of government documents.
Vivek Kannan outlines how technology initiatives are future-proofing the organization
A mass, affordable housing project