LICHFL Aims To Double Affordable Housing Share In Loan Book In Two Years

LIC Housing Finance Ltd. is aiming to more than double the share of affordable housing loans in its loan book to 20-25% in the next two years, a top official said on Monday.

The home finance arm of the insurance behemoth has witnessed a slower loan growth at 5% in the December quarter due to internal restructuring and management changes, its chief executive and managing director T Adhikari, who assumed charge in August, told reporters.

He said the company has been focused on the salaried and the high credit scores segment till now, which has led to a lower focus on affordable housing finance till now.

'At present, affordable housing is 8-10% of the portfolio, and we are targeting to take it to 20-25% of the loanbook in two years,' Adhikari said.

He said the segment provides handsome growth opportunities, given the demand for such credit, and offers wider margins to financiers.

There will be additional help coming by way of the government's priorities as well, Adhikari said, adding that the PM Awas Yojana will aid in generating demand for affordable housing, which makes the company 'upbeat'.

The overall real estate market is positive right now, but there is a war of rates among the financiers when it comes to lending for realty projects, Adhikari said, adding that the lending is happening at rates as low as 8.75% per annum.

LICHFL, which has a gross non-performing assets ratio of 34% on its project loan exposure, is cautious about the segment, he added.

Elaborating on the internal restructuring, Adhikari said it replaced a 13-year-old lending platform with a newer one capable of handling digital onboarding and shifted credit appraisal to 44 newly opened cluster offices in the recent past, which slowed down the loan growth.

He also admitted that management changes also had a role in slowing the growth, but was quick to add that the company's loanbook will grow at normal levels going ahead.

It is targeting to grow the loan book at over 15% in FY25, Adhikari said, adding that its board will be meeting in March to discuss the strategy.

The merger of the HDFC twins has not had any particular change for the home financiers, he said, adding that LICHFL has benefitted somewhat on the liabilities front.