Trends in Retail Housing Loans
Download
Report
Transcript Trends in Retail Housing Loans
Trends in Retail Housing Loans
- HFC’s Perspective
Presented by:
Anil Sachidanand (CEO - DHFL)
4/13/2015
NHB – CEO’s Meet 17th March’10
1
AS per vision 2020 “housing for All” 100 million housing units would be
required - Demand outcasts Supply
High Demand growth driven by:
Improved affordability
Increasing urbanization
Favorable demographics
Increasing economic activity
Increase in supply of affordable homes
Price correction in residential real estate market
Housing Finance penetration is still low in Tier-2, Tier -3 cities. Need more HFC’s, RRB’s,
Banks with focus on housing finance.
4/13/2015
NHB – CEO’s Meet 17th March’10
2
Level Playing Field for HFC’s
Two fold regulatory structure – On occasions results in duality
of rules
Convergence on differences with aspect to :
–
–
–
–
–
4/13/2015
Taxation treatment
Capital adequacy
Liquidity requirements
Deposit insurance
Disclosure requirements
NHB – CEO’s Meet 17th March’10
3
Lending Practices
Lower Income segment is still “untouchable” by many of the
players – Need for bringing in Financial Inclusion
More support required for developer financing in affordable
housing segment.
Lack of standardization in the lending process by various banks
& HFC’s
Increasing proportion of other loans in HFC’s credit portfolio due
to intense competition on yields from banks
4/13/2015
NHB – CEO’s Meet 17th March’10
4
Other Parameters
Rate of Interest
Introduction of 8% Home loans bought in interesting dimensions into
the Indian Mortgage Finance Market in the recent past
Broadening the market base – need for an independent floating rate
benchmark
Prepayment Charges
Prepayments to be correlated with interest rates
We still lack a well developed model to accurately forecast mortgage
prepayments
Customer’s lingering debt averse attitude play a more crucial role in
prepayment patterns
4/13/2015
NHB – CEO’s Meet 17th March’10
5
Customer Service
Emerging as one of the key areas in competition to win over
customers
HFC’s have been upgrading their technology and investing in
sophisticated systems for sourcing and processing and managing
information pertaining to home loan customers
On the service front the housing finance Company’s have begun
addressing concerns of borrowings through counseling and legal
advisory services on matters pertaining to property’s title, technical
evaluation, pricing etc.
As the scope for product differentiation is increasingly getting limited,
HFC’s will increasingly compete on the strength of their service
quality
4/13/2015
NHB – CEO’s Meet 17th March’10
6
Together GOI- RBI-NHB-HFC’s need to work towards overcoming the
challenges and constraints
Lack of Uniformity of norms and variation in standards amongst industry
players : Imposes systematic risks, which can be a potential threat
Aggressive approach may lead to defaults and downward revision of interest
rates - may lead to erosion of profitability in the long run
Industry Fragmentation: Major impediment for its growth
Conflicting Interests: Both banks & HFC’s competing with each other for the
same housing pie but functioning and lending practices seem to bear no
similarity
ALM: Asset liability mismatch one of the biggest risks confronted by HFC’s
Non availability of central registry for housing mortgages
4/13/2015
NHB – CEO’s Meet 17th March’10
7
What needs to be done?
Encourage / initiate small savings which can serve future housing needs thru Banks
or HFC’s?
Incentivize developers and HFC’s supporting affordable housing
Standardize origination intermediaries through licensing etc and strong punitive
measures for fraudulent intermediaries
Start to implement Electronic format for property registrations across the country
Develop products for seasonal income earners and aligning them with standard
NPA norms
Need for a mortgage guarantee company
FDI Constraints: ECB / FDI Route to be opened for HFC’s
Development of capital market by promoting securitization in India
4/13/2015
NHB – CEO’s Meet 17th March’10
8
DHFL: Way forward
A leading player with over 25 years of expertise in the LMI segment of the
Housing Finance Industry
Consolidated loan book stands at Rs.83.30 billion (Dec’09) with an average
ticket size of apprx. Rs.5 lac
Pan – India captive distribution network covering 194 locations
Way ahead:
Continued focus on LMI segment
Increase penetration in tier-2 and tier-3 locations through Public Private
Partnerships
Supporting affordable housing initiatives. Providing technical and marketing
advisory solutions to small size developers
4/13/2015
NHB – CEO’s Meet 17th March’10
9