Tag: Development Finance

Housing loan demand from informal sector is back on track, BFSI News, ET BFSI

Personal Finance

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Housing loan demand from the informal, self-employed lower income group is back to pre-covid level as economic activity resumed after the second wave, according to housing finance company who provide housing loan only to such sectors.

Agrim Housing Finance Company (Agrim HFC), and Religare Housing Development Finance Corporation Limited (RHDFCL) have plans to raise more fund, expand to more cities in order to cater to the growing demand from informal sector.

“By March 2021, we had a order book of close to Rs 500 crore. Due to the issues with parent company, we have not been able to disburse loan but we are in talks with bank to raise more fund and by Q4 FY 22 we expect to start disbursing again. In the next three years, we are looking to take our order book to Rs 3,000 crore,” said Rahul Mehrotra, Managing Director and CEO, RHDFCL.

50% of RHDFCL’s customers are salaried while the other 50% are self employed.

“The Covid pandemic did impact our customers and we had given rebate as per RBI’s guideline. Close to 50% it our customers availed moratorium. We have already started receiving queries for fresh loans and we expect to start disbursing from the fourth quarter of the financial year,” said Mehrotra.

The company has plans to expand to more cities of UP and Haryana and enter Uttarakhand as part of its deeper reach to tier 2 and 3 cities.

Agrim HFC that provide home loan only to informal sector, said that it has plans to take its order book from Rs 10 crore to Rs 100 crore this year.

“We plan to add 18 cities in the next 18 months. Covid has accelerated the digitisation and even those working in informal sector, use digital medium to avail loan,” said Malcolm Athaide, co founder and CEO, Agrim Housing Finance Company.

The company has funding commitments from CEOs of global and Indian companies. The company has presence in 4 cities, Mumbai, Pune, Bangalore and in Indore. Agrim HFC plans to expand its network to 18 locations in 7 states and expects a revenue growth of 30%, in the next 12 months.

“Adopting new age technology to provide easy and quick access to home loans Agrim HFC aims to fulfil the home ownership dream of the millions of Indians who have thus far faced difficulties accessing finance. Agrim HFC is able to provide easy housing finance solutions to individuals who are unable to prove their creditworthiness under the formal financial matrix,” he added.

India has more than 400 million households, with more than 160 million households in urban areas. There currently is demand for 3.1 million houses by the informal households of which only 0.7 million manage to obtain finance.

“Favourable demand dynamics driven by need for independent living spaces and growing financial inclusion of consumers in the informal sector have accelerated demand for mass housing. Participation from global developmental financing institutions for development of affordable housing projects and improving infrastructure connectivity with Tier 2 and 3 cities have emerged as strong supply side catalysts in this space,” said Sumeet Abrol, M&A and REI sector leader and Partner, Grant Thornton Bharat.



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SIDBI’s FY21 net up 3.6% at ₹2,398 crore

Banking & Finance

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Small Industries Development Bank of India (SIDBI) reported a 3.6 per cent increase in FY21 net profit at ₹2,398 crore against ₹2,315 crore in FY20 on the back of lower interest and finance charges as well as operating expenses.

Net Interest Income (difference between interest earned and interest expended) grew 11.5 per cent year-on-year (YoY) to ₹3,678 crore in FY21 against ₹3,299 crore in FY20, the Development Financial Institution (DFI) said in a statement.

Non-interest income declined 12 per cent YoY to ₹944 crore in FY21 against ₹1,069 crore in FY20.

Interest & finance charges were down about 15 per cent YoY to ₹6,543 crore (₹7,722 crore). Operating declined about 8 per cent YoY to ₹560 crore (₹607 crore).

Net interest margin increased by 10 basis points (bps) to 2.04 per cent as on March 31, 2021 from 1.94 per cent as on March 31, 2020, the DFI said.

Total advances of the DFI, which is engaged in creating an integrated credit and development support ecosystem for Indian Micro, Small and Medium Enterprises (MSME), declined about 6 per cent YoY to ₹1,56,233 crore as of March 31, 2021, from ₹1,65,422 crore as of March 31, 2020.

However, investments jumped 72 per cent YoY to ₹19,153 crore from ₹11,118 crore.

Gross Non-Performing Assets (GNPA) ratio decreased by 45 basis points (bps) from 0.63 per cent to 0.18 per cent, and Net NPA (NNPA) ratio decreased by 28 bps from 0.40 per cent to 0.12 per cent, as on March 31, 2021.

SIDBI said Provision Coverage Ratio (PCR) rose to 93.24 per cent as on March-end 2021 from 78.35 per cent as on March-end level.

There are 23 shareholders in the DFI including State Bank of India (16.73 per cent stake), Government of India (15.4 per cent), Life Insurance Corporation of India (14.25 per cent), National Bank for Agriculture & Rural Development (10 per cent), Punjab National Bank (6.37 per cent) and Bank of Baroda (5.43 per cent).

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Aditya Puri backs corporates in banking, says no harm in trying it, BFSI News, ET BFSI

Banking & Finance

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Former HDFC Bank chief executive Aditya Puri on Tuesday backed the proposal to allow deep-pocketed corporates into banking in India.

Puri, the founder chief executive of what has become the largest private sector lender who retired recently, said the country needs more banks to fuel its economic growth ambitions and capital will have to come from somewhere.

Late last year, an internal working group of RBI had proposed to re-allow corporates into banking, leading to a huge controversy on concerns over potential conflicts of interest.

“Giving (banking licences) to individuals didn’t work, public ownership didn’t work either. There is no harm trying it,” Puri said during an online event.

He named Yes Bank, started by two individuals, and also infra lender IL&FS which faced troubles over governance as cases which did not work and underlined the need to try something new.

In order to become a $5 trillion economy, India needs to have more banks and a corporate with a good set of ethics and a strong brand might just be the right candidate, Puri argued.

Puri, who has taken up an advisory role at a private equity fund and also a corporate directorship since retirement, however, did not favour the idea of having a bad bank to house dud debt and also that of a development finance institution (DFI).

Rather than bad bank, Indian banks can follow the remedial banking unit approach which has been successfully used to resolve bad debt issues in the US by the likes of Citibank and JPMorgan, he said, adding the RBI and the ministry of finance can supervise and oversee functioning of such a platform.

For the DFI, he said mistakes which were committed in the past should be avoided.

Puri further said the banking system has sufficient capital to see through the asset quality reverses and is sitting on excess liquidity of over Rs 6 lakh crore to take care of lending needs of the economy at present.

For the 8.5 per cent in non-performing assets, the system is carrying provisions of 7 per cent, he said and added that from a net NPA perspective, the Indian system is at par with any other in the world.

The challenges facing Indian banking are solvable, he emphasised.

On the future of state-run lenders, Puri said the government’s approach to have five large banks is a welcome one, but warned that there are a few more whose fates continue to be undecided and some choices will have to be made.

Terming it a sad eventuality, he said over the next few years the state-run banks, which currently possess over 65 per cent of the loans, will see a faster depletion in their market share than they have seen in the last two decades.

Puri said over 40 per cent of the payment volumes handled by banks are of third-party service providers like Amazon Pay, Google Pay or PhonePe, and demanded that the banks should be allowed to charge for rendering such services.

He justified the demand saying banks are the entities making upfront investments in the infrastructure and need to be compensated.

After cashbacks, none of the payment platforms are making profits, he added.

On the pandemic, he said the world underestimated India’s capabilities, pointing out that the recovery is faster in the country and it has come out better than most others.



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