Tag: LICHF

IPPB, LICHFL tie-up for home loans

Banking & Finance

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India Post Payments Bank (IPPB) and LIC Housing Finance Ltd (LICHFL) on Tuesday announced a strategic partnership for providing home loans to over 4.5 crore customers of IPPB.

As part of the Memorandum of Understanding (MoU), all home loans’ credit underwriting, processing, and disbursement will be handled by LICHFL, with IPPB responsible for sourcing.

IPPB, which has an extensive network of 650 branches and more than 1.36 lakh banking access points, will make LICHFL’s home loan products accessible to its customer’s pan-India, according to a joint statement.

IPPB’s on-ground workforce of nearly 2 lakh postal employees (Postmen and Gramin Dak Sevaks), equipped with micro ATMs and biometric devices and offering Doorstep Banking Service, will play a significant role in providing LICHFL’s housing loans, it added.

IPPB is currently distributing various general and life insurance products through partnerships with leading insurance companies, and credit products are a natural extension for the customers at the last mile, the statement said.

J Venkatramu, MD & CEO, IPPB, said, “Easy access to credit for buying a house is an important prerequisite towards achieving inclusive growth.

“…The partnership with LICHFL is a significant tie-up in IPPB’s journey to become one of the largest platforms for availing credit products by our customers for meeting various needs…”

Y Viswanatha Gowd, MD & CEO, LICHFL, said this strategic MoU with IPPB will help LICHFL to further deepen its market penetration.

“…We see this strategic partnership as a significant step that will help our long-term business growth and improve our market share.

“This is in line with the Company’s objective to increase business contribution from Tier 2 markets and beyond,”Gowd said.

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Banks, NBFCs see home loan delinquencies rise as pandemic hits borrowers, BFSI News, ET BFSI

Banking & Finance

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It’s not just retail, non-collateralised loans that are seeing delinquencies. Home loans that are mortgage-backed are seeing stress due to the pandemic.

Home loans of many banks have seen signs of stress with data from IMGC, a leading guarantor of such advances pointing to

an increase of nearly three times in the mortgage delinquency pool over the past 15 months.

IMGC guarantees home loans for about 20 lenders, including the State Bank of India, Housing Development Finance Corp, ICICI Bank and Axis Bank.

The number of claims paid by IMGC has gone up three times in June since March 2020, but it feels that the worst is over for the segment and the situation will stabilise in the next six months.

LIC Housing Finance

LIC Housing Finance has said there has been an increase in delinquencies, mostly due to economic activities being impacted in Q1. With improvement in economic activities and our increased and focused efforts in recovery, it was confident of controlling the same.

For LIC Housing Finance, on the asset quality, the stage-3 exposure at default worsened to 5.93%, from 4.12% a quarter ago and 2.83% a year ago.

There was a sharp deterioration in asset quality across product segments. Developer/Project GNPA deteriorated to 24.4% (down 640 bps quarter on quarter). According to brokerage estimates, in addition GS3, its Developer/Project book has at least 25% of restructured advances and ~16% in Stage 2.

Total restructured advances of LIC Housing Finance stood at Rs 5,350 crore (of which an estimated 88% were loans to corporate/developers). Against this, LICHF has made additional provisions of Rs 5,000 crore. Around Rs 1,500 crore of Covid-related provisions were booked in the First quarter

Housing finance companies

Non-bank lenders have restructured loans worth 1.6% of their overall book. Out of this while housing finance companies restructured about 1.0% of their AUM, other NBFCs restructured about 2.2%.

According to the rating agency Icra, the restructured book for non-bank lenders is expected to move up to 4.1-4.3% by March 2022 while the same for housing finance companies is estimated to go up to 2.0-2.2%.

The second wave of the Covid pandemic significantly impacted the collection efforts of non-bank lenders especially those in the business segments of vehicle finance, business loans and micro finance, who witnessed their collection efforts decline by about 20-25% in May 2021 versus March 2021. The efficiency improved by 3-5% in June 2021.

TThe loans due beyond 90 days, in March 2021 increased by only 30-40 bps over March 2020 levels, as the collections had improved steadily. Several institutions resorted to high quantum of loan write-offs in the fiscal year gone by which was estimated to be about 1.6% of the total assets under management, which is higher by about 60 basis points over the last fiscal.



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