Green shoots in the home loan segment are quite visible, and PNB Housing Finance is confident that the festival months will see a surge in the home loan market, says MD and CEO Hardayal Prasad. In an interview with Mithun Dasgupta, Prasad says the company has tightened its credit guidelines to strengthen the underwriting process, keeping in view the stress in real estate sector. Excerpts:
Are you seeing a pick-up in home loan demands due to this festive season?
With the gradual easing of lockdown restrictions, economic activity is once again picking up across sectors, including real estate and the home loan market. Our company is witnessing a steady growth in individual home loans on a month-on-month basis. In July, we had reached 70% of our pre-COVID-19 level and it has been increasing since then. Our home loan segment has been further strengthened by our digital on-boarding platform, ACE, which has considerably eased the borrower’s loan journey from application to disbursal. We are well-positioned to meet the home loan demand from the affordable housing. The green shoots in home loan are quite visible, and I am confident that the festival months will see a surge in the home loan market.
As there is high uncertainty on the economic outlook due to the pandemic, has the company adopted more stringent process before sanctioning a loan? Which customer segments are you focusing on for loan growth?
Keeping in view the micro and macro-economic stress in the real estate sector, we have tightened credit guidelines to strengthen the underwriting process. The sectors that are deeply affected by Covid-19 are being reviewed closely and tightening of underwriting is being done wherever necessary. Our focus will be on individual home loan where we are expecting good business in FY21. Along with the focus on mass housing, we will also enhance our reach to segments where the financial discipline is better and the demand is rising. On the customer front, we are witnessing a decline in the average age of our borrowers.
What is the current scenario of loan disbursements in urban and rural regions?
Rural India has been resilient in the face of the pandemic and is already showing signs of a recovery. However, it is urban and semi-urban India, including Tier II, III and IV cities, which are fuelling growth in demand for home loans. For now, disbursal of home loans is primarily concentrated in these areas. Going forward, the impetus on affordable housing and the favorable interest rate regime will continue to spur demand for home loans in urban areas.
How do you see PNB Housing Finance regaining market share within HFC space? Do you believe the market is again conducive for growth?
We are among the top home loan providers in the country and our aim is to expand our presence and reach. We believe that the government mandate of ‘housing for all’ will result in a major surge in demand in coming days. I believe that owning a home is a very emotional decision in India and we will continue to see higher demand than any other retail product. Our customer-centric approach will help us maintain our leadership position in the market.
The Reserve Bank of India earlier this month rationalised the risk weightage to LTV (loan to value) ratio for all new housing loans sanctioned up to March 31, 2022. It has also decided to extend the co-origination scheme to all the NBFCs, including HFCs. How are these measures going to help the company?
The extension of co-lending model will help expand leverage capacities of HFCs and unlock value for our company. Rationalising the risk weights for all new housing loans and the relaxation extended for the LTV will give the much needed impetus for the housing sector. Home loans will become accessible and competitive for customers.