Housing finance cos eye affordable housing space
BENGALURU: New entrants in the mortgage lending space are focusing on providing small homeloanstocustomersincities and small towns, aided by schemesandinitiativeslaunched bythecentralgovernmenttopromote affordable housing.
New lenders such as Lodha Ventures, Centrum Housing Finance Ltd, JM Financial Ltd, Piramal Finance Pvt. Ltd and Capri Global Housing Finance Ltd have either started lending this yearorareawaitinglicences to begin operations.
Centrum Housing Finance beganlending in Februarystarting with Madhya Pradesh, and plans to cover Gujarat soon. “We realized there is a huge opportunity in Tier 3 and 4 towns where there is a lot of end-user demand for housing loans. In the affordable housing segment, we needed to look beyond the traditional lending model without comprising on collateral,” said Sanjay Shukla, managing director and chief executiveofCentrumHousing Finance.
Centrumprovideshomeloans between₹5lakhand₹40lakh, and its average loan size is ₹11 lakh. Shuklasaidthecompanyplansto have a loan book of ₹250 crore by the end of 2017-18.
Financial services firm Lodha Ventures hasobtained licence to operate a housing finance company and plans to launch it in November. The company, plans to offer home loans of up to ₹25 lakh in Mumbai and up to ₹15 lakh in other markets.
“The affordable housing segment is growing very fast, and is helpedbythevarioustaxbenefits and incentives given by the government,” said Lodha Ventures founder Abhinandan Lodha. “The risk to reward ratio in this space is also very attractive. We are looking at a buyer segment which is outside the typical salaried class of people, which is catered by large HFCs (home finance companies) and there is huge demand in that space,” Lodha said.
“Wehavealignedourhousing finance business primarily with Pradhan Mantri Awas Yojana becauseoftwomainreasons; one, since it will becomepartofbuilding the nation with Prime Minister Narendra Modi’s most ambitious project of Housing For All by 2022 and secondly, it will empower the weaker section of the society who can fulfil their dream of owning a house,” said Rajesh Sharma, director, Capri Global Capital Ltd.
Affordable housing finance is set to be a ₹6 lakh crore opportunity by 2022, said a June 23 India Ratings and Research report.
The research agency anticipates demand for 25 million homes over FY17-FY22 in the medium-incomegroup(MIG) and lower-income group (LIG) categories.
Acombination of factors such as governmentfinancial andpolicy thrust, regulatory support, rising urbanisation, increasing nuclearisation of families and increasing affordability is convertinglatentdemandintoacommercially lucrative business opportunity, the report said.
“...Demandcreationlargelyby regional or focused players will further boost the existing latent demand. Alargesize of the incremental customer sets could be introduced to formal credit for the first time. This could primarily be on account of lack of customerawarenessforeligibility to the formal credit channel as well formal documents. The Jan Dhan-Aadhaar-Mobile trinity could be an enabler in this step,” the India Ratings and Research report said.
This year, two large financial services firms JM Financial Ltd and Piramal Finance Ltd said they will enter housing finance, with a focus on affordable housing. Both are awaiting licences fromtheNationalHousingBank.