The demand for affordable housing in India is growing and has a significant potential for growth. Harshil Mehta, joint managing director & CEO, DHFL in an interview says the government has taken several steps to build a conducive environment for growth of the affordable housing segment. Edited excerpts:
How has DHFL evolved as a financial services company to address various requirements of customers?
For over three decades, DHFL has reached out to millions of customers across India and helped fulfil their dreams of owning a home. The expertise of servicing this particular segment has led us to evolve as a comprehensive financial services company. As a group, our product offerings also include insurance, mutual funds, education loans to service the full spectrum of consumers’ loan and investment requirement.
There has been considerable internal transformations in DHFL over the last few years. How has DHFL redefined its position in the market?
DHFL has aligned its business model and its products and services to best suit the needs of the lower and middle income (LMI) customer segment. We have also adopted a verticalisation strategy for greater focus on the various businesses verticals that we operate in. This has ensured that individual businesses (housing and non-housing loans) could focus on their core competencies while leveraging synergies and expertise in underwriting loans and to meet various financials requirements with specialised products and services.
The demand for affordable housing in India is growing at an exponential rate and has a significant potential for growth. The gap between supply and demand in the affordable housing segment is huge. Although the industry is served by several large financial institutions, companies like DHFL are placed with strong competitive advantages to serve LMI customers in tier 2 and 3 towns.
The ratio of outstanding housing loans to GDP is very low in India as compared with China. What should be done to improve affordability and widen the reach of financiers?
Over the past few quarters the government has taken several steps to build a conducive environment for growth of the affordable housing sector. This has opened up significant growth opportunities for DHFL and we have been leveraging these opportunities and growing aggressively on the back of several competitive strengths such as our knowledge and expertise in the low and middle income target segment, which facilitates our ability to underwrite credit to the segment, our business model and focus on tier 2 & 3 cities. The foundation to encourage industry growth has already been laid and we are extremely positive that the contribution to GDP will significantly improve on the bedrock of the conducive environment, thereby driving financial inclusion across the country.
Despite focus on lending to the lower-middle income group, how have you been able to maintain benign asset quality?
Our credit evaluation and credit portfolio management methodologies are designed to ensure consistent underwriting standards. Our systems, processes and functional capabilities are built on the principles of good corporate governance and are implemented within the framework of proper checks, balances and controls. Our credit underwriting skills and our well-built operational systems further reduces our risk. We maintain a high level of customer quality checks and also have a robust collection machinery, supported by a strong backend for timely action in protecting our asset quality.
How are you using technology for the convenience of your customers and stay ahead of the curve?
DHFL is already in the process of making significant transformations in IT infrastructure to leapfrog to the next-generation of a scalable and flexible technology landscape. Such a strategy will help us improve productivity, enhance transparency, reduce cost, superior customer experience and sustain growth.
How do you think RERA will help end consumers who spend their life’s savings to buy a house and are often cheated by dubious builders?
RERA is set to build a transparent ecosystem for all industry participants including buyers, developers, financial institutions like banks and housing finance companies and other important stake holders. It is a timely implemented initiative of the government’s mission towards industry development and a catalyst to meet the objectives of Housing for All by 2022.