The Rs 4.8 lakh crore home loan market in India is expected to see more competition in the next months. The competition would increase due to the steady pressure from some non-banking finance companies (NBFCs). These companies are experiencing a compounded annual growth rate (CAGR) of 15% for the earlier 5 years.
Laxmi Vilas Bank has introduced its housing finance division. Others in the line include Shriram City Union Finance and financial services company Edelweiss.
Mr. Rujan Panjwani, president, Edelweiss Capital said, “There is enormous room not just for commercial banks but also for housing finance companies (HFCs). Our strategy to enter this sector is to focus on the retail side of the business. We have already an asset management company and would be entering into life insurance”.
Mr. R Kannan, MD, Shriram City Union Finance (SCUF) said,”We have been offering gold loans and now our customers can also avail home loans from us. The housing finance foray will begin shortly through a subsidiary with an initial capital of Rs 100 crore”.
Mr. Kapil Wadhawan, CMD DHFL, said, “Housing finance being a secured lending with lesser delinquencies is much safer. The consistent growth in the books of HFCs is also acting as an incentive for new entrants.”
But he warned, “Lending is part of their business proposition and it may become difficult for them to focus on lending quality”.
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