With the Centre’s focus on affordable housing, housing finance companies are now gearing up to meet the higher demand in this segment.Ashwini Kumar Hooda, Deputy Managing Director, Indiabulls Housing Finance Ltd., says the Union Budget will be crucial. Edited excerpts:
How was H1 FY17 for the housing finance business?
The housing sector was provided with plenty of impetus last year. From a Budget tailored to increase benefits for builders and home buyers to multiple initiatives to boost the efforts for ‘Housing For All by 2022,’ the ecosystem found itself in an abundance of favourable factors. Improved consumer confidence and attractive housing options saw the sector receive record bookings this past year.
Can you shed some light on smart city home loans?
We have always considered our ability to cater to the affordable housing segment as our strength highlighted by our average ticket size of ₹25 lakh for home loans. With the unveiling of India’s first completely digital home loan – Indiabulls e-home loans – we aim to extend our reach to India’s 100 smart cities.
With the growing importance of technology in India’s Tier I and Tier II cities, the smart city home loan will use a digital route to reach out and service the affordable housing segment.
Do you think the announcements made by Prime Minister Narendra Modi on New Year’s eve would have a huge impact on the home loan industry?
The Prime Minister handed affordable and low-cost housing further incentives to further add momentum to the already strong affordable housing segment. Not only has he effectively made an “EMI” cheaper than “rent” for the affordable home buyer, he has provided a timely boost to his vision of ‘Housing For All by 2022.’ The subvention of 3% and 4% on home loans of ₹9 lakh and ₹12 lakh respectively coupled with the lowered interest rates by the RBI created a very happy new year for home loan buyers. The home loan industry can only benefit from such positive factors which promise to increase the demand for homes and in turn home loans, greatly. In January, we are already seeing a positive impact with manifold increase in number of home loan applications.
Banks have now decided to reward customers with good CIBIL scores by offering them lower interest rates. Do you have plans around the CIBIL scores of applicants?
At Indiabulls Housing Finance we have traditionally not used CIBIL score due to inherent limitations of such scores for large ticket and long tenure home loans.
We invest heavily in studying the entire CIBIL report to identify and analyse patterns in our customers’ credit behaviour. Based on these observations, we make well informed decisions on the credit worthiness of applicants and provide the best possible loan solution. We offer our prime lending rate (PLR) of 8.65 % to borrowers who qualify on all our criteria.
The real estate regulatory bill (RERA) was passed by both houses of the Parliament last year. How do you think it will impact the housing finance sector?
The RERA is another initiative which aims at empowering the end consumer. Although this might reduce supplies and increase prices in the short term, it promises to increase customer confidence by leaps and bounds in the long term.
We are looking towards more and more subsidies, schemes and bills being passed for the benefit of the end consumer.
The more our customers are confident, the greater our prospects of growth increase.
With technology overpowering businesses and business models, how are you future ready?
2016 was a year of digital transformation for Indiabulls Housing Finance. We introduced India’s first completely online home loan, the Indiabulls e-Home Loan. This digitises the entire home loan process from application to disbursal and increases effectiveness many fold.
The tedious home loan process is now so fast that customers can receive sanction for a home loan in 6-8 hours without having to visit a branch. Within 3 months of its introduction, 11% of our incremental home loans have been sourced through e-home loans.
We believe that digital is no longer in the future but firmly in the present and we are geared up to constantly evolve and prove best-in-class services leveraging these aspects.
What are your expectations from the upcoming Union Budget?
The upcoming Union Budget will be crucial. The good work done by the government in the past year in providing the common home buyer with more and more incentives can be taken to the next level.
My expectation from the Union Budget is to have newer/better incentives and policies rolled out for developers of the affordable housing segment such that the growing demand has a steady supply.
How do you foresee the housing finance market in 2017 compared to 2016?
Having grown at 30% CAGR in the last 3 years, affordable housing as a segment will continue to see growth in 2017 as it is backed by factors like increasing urbanisation, favourable demographics (66% Indians are below the age of 35), lower interest rates, increasing subsidies like the Prime Minister’s Awas Yojana and greater tax benefits. Housing finance companies will do well to customise their offerings to best suit this segment.
With some banks offering home loans at 8.35 %, do you think there is more scope for rate reduction among housing finance companies?
Another cut in home loan rates will largely depend on the RBI’s stance in the monetary policy in February. We hope to see a couple of rate cuts of 25 basis points each in the calendar year 2017.
