Future growth will depend on affordable housing and e-commerce: Siddhartha Mohanty, LIC Housing Finance
We have grown in the quarter and affordable housing segment has been the largest contributor - (in terms of number (+68%) and amount (+78%)) - and will help us in meeting our business targets in the year, says Siddhartha Mohanty, Managing Director and Chief Executive Officer, LIC Housing Finance (LIC HFL), during an interview with Zee Business.
We have grown in the quarter and affordable housing segment has been the largest contributor - (in terms of number (+68%) and amount (+78%)) - and will help us in meeting our business targets in the year, says Siddhartha Mohanty, Managing Director and Chief Executive Officer, LIC Housing Finance (LIC HFL). Mohanty during an interview with Pooja Tripathi said, " our NPA has gone up from 1.98 to 2.38 (40bps) and few big accounts are responsible for it". Edited Excerpts:
Q: What is the disbursement growth in the September quarter and name the geographies and segments that have contributed to the growth?
A: Affordable Housing segment is the largest contributor to our growth. And, within the affordable segment of the Pradhan Mantri Awas Yojana (PMAY), we have grown by 68% number wise and 77% in terms of amount. As on date, we have disbursed about 25,000 loans and have sanctioned an amount of more than Rs5,000 crores. It has a share of 26% in terms of numbers as well as the amount to the entire business. And in the coming time, we will pay more attention to the segment as I think it will help us in achieving the business targets of the year.
Q: We have seen an increase in gross NPA numbers that stands at 2.38%. Take us through the details and name the accounts that are under stress?
A: Asset quality has always been a matter of concern for us and this time it has grown by 40bps. i.e. has gone up from 1.98 to 2.38 level and big accounts are responsible for this rise. But, the individual loans in retail has been kept under control and is not a matter of concern for us. However, a slight amount is being recovered from the NPA accounts and we will pay more attention to these accounts in near future because these NPA accounts and non-recovery has an impact on our profitability and other aspects.
Q: So are you confident about the recovery process or you have to go for more provisioning in the coming quarters?
A: I am optimistic about the recovery process. I feel that we will recover a lot in next two quarters because several accounts - with whom we were negotiating - failed to make payments at the last moment and I think, they will pay the amount in the recent future. Interestingly, they are big accounts and their contribution will have a positive change. Besides, we will pay attention to asset quality and make sure that further deterioration doesn't happen.
Q: Several NBFCs are acquiring the loan portfolios of small NBFCs. Have you acquired any loan portfolio till date or have plans to do so?
A: Not yet but our board will decide on it if some good proposals prop up. However, we don't have any such proposal at our table at present.
Q: What are your fundraising plans and how it will impact the disbursement cycle of the company?
A: As far as fundraising is concerned then we have a fund pattern that includes NCD, bank loan, public deposit and commercial paper (stands at a negligible level). So, it is a mixed option. At the time, when the interest rates are going down, we will find out the best rates at which we receive the funds to make sure that we can pass on its benefit to our customers as well. At present, we are providing housing loans at one of the lowest rates in the market.
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Q: What is your outlook on-demand scenario/credit growth for coming quarters amid negative news related to the financial and banking space?
A: The government has taken several positive measures for the sector in the last 3-4 months. It will give a boost to consumption demand on the retail side. The government has given benefits like increase in deduction on the interest paid on loans taken for affordable housing from Rs2 lakh to Rs3.5 lakh to people. It has also increased the subsidy amount under PMAY.
As far as credit side is concerned, the government has released funds for banks and NBFCs and has also increased their limit. I feel the supply side of credit and consumption demand at the retail level will grow well in the remaining two quarters of the remaining part of this financial year. Interestingly, maximum growth will be seen in the affordable housing segment (PMAY). Apart from this, eCommerce - on the commercial front - is growing at a tremendous pace and will need support in the form of logistics and warehouse among others. So, we will also pay attention to the segment - affordable segment and commercial side - where growth opportunities are visible.