'We want to be a player in all segments of housing'

Tata Capital Housing Finance Limited (TCHFL), the wholly-owned subsidiary of Tata Capital, has set an ambitious target of achieving Rs 20,000 crore book size in the next three years from the present Rs 12,440 crore. Deccan Herald’s Umesh M Avvannavar sat down with the TCHFL Managing Director Vaithianathan Ramachandran to understand the trends and initiatives in the housing finance market in India.

Can you please explain the journey of TCHFL till now?

Tata Capital Housing Finance was formed in 2009. TCHFL is a 100 per cent subsidiary of Tata Capital, which is a 100 per cent subsidiary of Tata Sons. We formed housing finance because it is regulated by the NHB (National Housing Bank). If we do affordable housing under the NHB, we will be able to get funds for long- term, and this is one of the benefits for HFCs (Housing Finance Companies).

From 2009 to till date, we have been growing at a CAGR of 35-40 per cent and in the last year, we ended the book with around Rs 9,200 crore. As on date, we are at around Rs 12,440 crore book size, and we will end the year with Rs 13,000 crore.

However, we are planning to take the book size to Rs 20,000 crore by the end of the next financial year itself.

Ours is a profit making organisation from the beginning. Our NPAs are around 0.7 per cent as against the industry standard of 1 per cent. We have over 1,000 employees on roll and 850 field employees.

What are the categories that you cater to in the housing industry?

We cater to varied industries, right from the construction finance to housing loan. In the housing finance segment, we are both in affordable housing and in the normal segment.

Our affordable housing portfolio as on date is around Rs 1,800 crore, and construction finance is Rs 1,200 crore. Our average ticket size of the book for home loan is Rs 27 lakh.

Three years ago, the industry was growing at around 20-21 per cent, whereas at present it is growing at 18-20 per cent. We want to grow our business at 30-40 per cent. We are present in 70 cities with 80 branches.

In two years time, we will expand our business to 100 cities. We want to be a player in all the segments of the housing finance business. If you take HFCs players in India, we are at the sixth position right now.

Housing For All by 2022 is PM Narendra Modi’s ambitious project. How do you see the growth happening in the industry and what about Tata Housing?

The Pradhan Mantri Awas Yojana (PMAY) is a Housing For All scheme that focusses on enabling better living. The NDA government has identified 305 cities and towns across nine states for implementation of this scheme.

If you take a loan of Rs 6 lakh and below, and if your income level is Rs 3 lakh and below per annum, then the government of India through NHB will provide interest subsidy of 6.5 per cent.

It is a very good initiative and we have also started working on it. The low income housing, 1 BHK, and economic weaker section housing are the areas that will grow in the next two-three years.

We have started funding the drivers and clerk IV employees of the central government. If you take Mumbai, people cannot afford to own houses in cities, and so they opt for Rs 15-18 lakh budget house. We try wherever they fit into the scheme and award it.

What about recovery problems faced by the industry? Have you taken any steps?

We are covered under the SARFAESI Act (The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002). We need not approach the court. If there are some three instalments outstanding, we can issue a notice and ask him/her to pay within 60 days.

If that person is not paying within 60 days, another 30 days time is provided. After that we can put up a notice in the place of the property. We will sell that particular property and if there is any balance, we will return it.

This Act is applicable to the HFCs. In the last budget, the government granted powers to all the HFCs. This made us enter the housing loan business with confidence. If a customer is not paying, then we can make use of the Act.

How important is the Karnataka market for TCHFL ?

Till date, we have Rs 925 crore book size in Karnataka. We have our presence in cities like Bengaluru, Mysuru, Hubballi and Mangaluru.  We are doing affordable housing in Mysuru, Mangaluru and Hubballi. Bengaluru is one of the best markets for mortgage housing loans, and especially for Rs 40 lakh-65 lakh ticket size.

Are there any challenges that you face in the industry?

We have to get a long-term fund in this industry, and for which we need equity capital. Fortunately, our management Tata Sons, through Tata Capital, is fully supporting us. We take long-term funds from the NHB. Apart from this, we also approach the bank.

It is said that most of the flats are unsold in Bengaluru. How is the demand for housing in the City?

Even in Bengaluru, properties that are above Rs 1 crore have less demand.  The demand for properties around Rs 40-50 lakh is not bad and it is growing. Sluggishness exists in case of properties that are above Rs 1-3 crore.

Usually, investors used to buy those properties, but now they are not approaching. So, all developers are now shifting towards affordable housing segment, which is between Rs 40 lakh and Rs lakh range.

There are many PSBs, private banks and finance companies. What is your USP?

Customers have to visit banks, but we go to the customers’ place and serve them. Also, we guide them. We update customers about the projects approved by us. Our USP is once we grant a loan; the legal title should be 100 per cent pucca.

We don’t grant a loan on the property that does not have a proper legal title. Our legal evaluation is very strict. oan sanctioning takes some 48 hours for the salaried customer.