{"id":43640,"date":"2023-10-01T09:39:39","date_gmt":"2023-10-01T09:39:39","guid":{"rendered":"https:\/\/histarmar.net\/?p=43640"},"modified":"2023-10-01T09:39:39","modified_gmt":"2023-10-01T09:39:39","slug":"our-aim-is-housing-finances-siginficant-role-in-economic-growth","status":"publish","type":"post","link":"https:\/\/histarmar.net\/business\/our-aim-is-housing-finances-siginficant-role-in-economic-growth\/","title":{"rendered":"‘Our Aim Is Housing Finance’s Siginficant Role In Economic Growth’"},"content":{"rendered":"

‘We are working with a few housing finance companies to drive affordable lending because that’s where we believe our sweet spot is.’<\/strong><\/p>\n

<\/p>\n

Indian Mortgage Guarantee Company (IMGC), the country’s only mortgage guarantee firm, aims to ramp up its portfolio five-fold to Rs 1 trillion over five-six years.<\/p>\n

Mahesh Misra<\/strong>, managing director and chief executive officer of IMGC, spoke with Raghu Mohan<\/strong>\/Business Standard<\/em> on the plot ahead.<\/p>\n

What do you think will be the impact of the HDFC twins on the home loan business?<\/strong><\/p>\n

HDFC Bank has a very ambitious DNA; we expect this to translate into a higher appetite for market share.<\/p>\n

The race for the top spot between the State Bank of India (SBI) and HDFC Bank will hot up, but what this will also mean is that banks will have a disproportionate share of the mortgage industry, and 70-75 per cent of the home loan originations will be with them.<\/p>\n

As most banks typically tend to focus on the top-tier cities and on loans greater than Rs 25 lakh, housing finance companies (HFCs), especially those into affordable housing, will play a very critical role.<\/p>\n

I believe that for affordable-housing focus to sharpen, it’s imperative that some of the HFCs quickly build scale.<\/p>\n

The key will be HFCs backed by large industrial houses – access to capital along with the parent company’s rating is an added advantage as they will be able to borrow cheaply.<\/p>\n

So, what we will need is a couple of HFCs to build scale and quickly weave their way into the top slots.<\/p>\n

What stopped HFCs from scaling up?<\/strong><\/p>\n

If you look at the scenario, say five years ago, HDFC, LIC Housing, the erstwhile DH&FL, Indiabulls, and PNB Housing Finance were originating upwards of Rs 1,000 crore a month.<\/p>\n

What happened was that those with access to low cost of funds – and with the liquidity challenges that came after Covid – the larger players got a disproportionate advantage.<\/p>\n

It’s imperative for HFCs to build scale.<\/p>\n

Even in the case of DH&FL, the retail book was not really troublesome.<\/p>\n

HFCs have demonstrated that it’s possible to build a large book along with affordable lending even in the aftermath of Covid.<\/p>\n

The point is, the self-employed are facing a struggle; and if you look at the large players, the proportion of salaried borrowers in their origination mix is very high.<\/p>\n

HFCs having reasonable access to capital should be demonstrating ambition to build scale.<\/p>\n

We also believe that once the securitisation committee’s recommendations, and a couple of other initiatives, [come in] it will help the smaller HFCs operate with greater ease.<\/p>\n

Can you give us a sense of your ambitions in the mortgage guarantee business?<\/strong><\/p>\n

We have guaranteed about Rs 20,000 crore and expect to grow 40-50 per cent over the next 3-4 years after which our growth could taper off, to say, 20-25 per cent.<\/p>\n

Our ticket-size was Rs 26 lakh four years back; it’s now at Rs 19 lakh.<\/p>\n

We have a partnership with SBI and are in advanced discussions with three other state-run banks (LIC Housing is our largest lending partner).<\/p>\n

At the same time, we are also working with a few housing finance companies to drive affordable lending because that’s where we believe our sweet spot is.<\/p>\n

I think a portfolio of Rs 1 trillion is where we will get to over the next 5-6 years.<\/p>\n

We want to play a significant role in the growth of housing finance as a contributor to the economy.<\/p>\n

Nearly half of the housing finance originations happen in the top five-six cities.<\/p>\n

Most of the innovation has happened in unsecured lending.<\/p>\n

Secured lending practices still remain fairly archaic.<\/p>\n

Given the number of people for whom a housing loan is their first entry into the financial system, we are on the verge of rolling out a score drawing upon our experience with nearly 23 lending partners.<\/p>\n

We have the unique experience of access to claims data. We are piloting a score which will be largely for new-to-credit customers.<\/p>\n

And how does this compare with the initiatives in other countries?<\/strong><\/p>\n

In Canada and the United States, mortgage guarantee is compulsory.<\/p>\n

In India, it’s not so because our loan-to-value ratios tend to be lower; and the borrowers’ approach to a housing loan is different, as in, its repayment is probably next only to school fees in the hierarchy of repayments.<\/p>\n

It (mortgage guarantee<\/em>) is a great enhancement substitute in securitisation.<\/p>\n

That’s because many such transactions require the originator to keep a cash collateral, and a guarantee acts as a substitute.<\/p>\n

But more and more lenders are seeing the value of expanding the risk box with a guarantee.<\/p>\n

With the expected-credit-loss model, it will help as our guarantee covers their entire exposure.<\/p>\n

We have paid every single claim that has come so far; our credibility is well established.<\/p>\n

Feature Presentation: Aslam Hunani\/Rediff.com<\/em><\/strong><\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

‘We are working with a few housing finance companies to drive affordable lending because that’s where we believe our sweet spot is.’ Indian Mortgage Guarantee Company (IMGC), the country’s only<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"yoast_head":"\n'Our Aim Is Housing Finance's Siginficant Role In Economic Growth' - histarmar<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/histarmar.net\/business\/our-aim-is-housing-finances-siginficant-role-in-economic-growth\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"'Our Aim Is Housing Finance's Siginficant Role In Economic Growth' - histarmar\" \/>\n<meta property=\"og:description\" content=\"‘We are working with a few housing finance companies to drive affordable lending because that’s where we believe our sweet spot is.’ Indian Mortgage Guarantee Company (IMGC), the country’s only\" \/>\n<meta property=\"og:url\" content=\"https:\/\/histarmar.net\/business\/our-aim-is-housing-finances-siginficant-role-in-economic-growth\/\" \/>\n<meta property=\"og:site_name\" content=\"histarmar\" \/>\n<meta property=\"article:published_time\" content=\"2023-10-01T09:39:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/im.rediff.com\/money\/2022\/oct\/20loanguru.jpg?w=670&h=900\" \/>\n<meta name=\"author\" content=\"mediabest\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mediabest\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/histarmar.net\/business\/our-aim-is-housing-finances-siginficant-role-in-economic-growth\/\",\"url\":\"https:\/\/histarmar.net\/business\/our-aim-is-housing-finances-siginficant-role-in-economic-growth\/\",\"name\":\"'Our Aim Is Housing Finance's Siginficant Role In Economic Growth' - 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