PNB Housing Finance MD & CEO Ajai Shukla is targeting the Rs 1 lakh crore milestone within the next six months, with affordable and emerging housing poised to drive the company’s next phase of expansion. In a conversation with Kshipra Petkar and Mahesh Nayak, Shukla projected 18–20% growth in FY27, supported by lower borrowing costs following the improved AAA ratings.
With the revised RBI norms, will PNB Housing remain in the on NBFC-Upper Layer segment?
Our asset book is already above Rs 90,000 crore. The upper layer threshold is Rs 1 lakh crore, and we expect to reach that within six to seven months. However, from a governance standpoint, the layer classification does not change our approach. Even if we fall in the middle layer, our regulatory expectations will be aligned with banking norms and remain stringent. We come from a culture of strong governance, and our view is that compliance standards should not be diluted based on layer classification.
Is stress visible in the affordable housing segment?
We have not seen any meaningful stress so far. However, if the current geopolitical and inflationary environment does not normalise within 30–60 days, there could be some impact on the broader economy, not just housing finance.
Will the West Asia geopolitical crisis impact India’s inflation and housing demand?
Inflationary pressures are already visible, even if not fully reflected in official data yet. Considering situation stabilises in the next couple of months, the impact on housing volumes should be limited—perhaps a 1% drag on industry growth. However, prolonged instability could affect construction costs, supply chains and consumer sentiment.
What is your growth outlook for the affordable housing business?
We expect 50% growth in affordable housing disbursements this year (FY27). Last year, we disbursed around Rs 3,800 crore; given our relatively smaller base and the large market opportunity, scaling up is achievable. We have expanded distribution significantly adding 35 new branches this year and 50 last year, so the infrastructure to support growth is already in place.
Will premium housing continue to be de-emphasised?
Premium (prime) housing grew 9% last year, and we expect similar growth ahead.
With a Rs 1 lakh crore book and 50% in prime, we cannot disproportionately grow the prime segment without affecting overall growth. Hence, the strategic focus remains on emerging and affordable.
What is the overall growth expectation for FY27?
Emerging plus affordable contributed 37% of our business last year and has now risen to 40%. Over the next two years, we expect this combined share to reach 50%. Emerging housing alone should grow at 25–26%, slower than affordable but still strong.
At the company level, we expect 18–20% growth, better than the 16% retail growth recorded last year. We will certainly cross Rs 1 lakh crore this year. For FY27, the book should be around Rs 1.08 lakh crore.
What about your corporate lending book?
We will not be more than 3% of our AUM in our corporate book. In three years, we can look around 7-8% of our overall book would be corporate, but retail would be the focus area.
Which segments in the corporate loan will you be focusing on?
It would be construction finance and we will also be very selective in terms of geography where we will operate. It would be largely top 8 cities or maybe maximum 10 cities in the country where we see that the sustainability of demand, where the good profile builders and demand is there.
What is your outlook on NIM?
Our margins haven’t softened. Yields moderated after the 125 bp repo cut, but we didn’t pass on the full reduction, and our borrowing cost improved from 7.85% to about 7.5%, with incremental funding at 7.25–7.28%. As a result, NIMs stayed stable and even rose by around 6 bps between December and March. With one AAA already secured and another expected, we see a further 15 bp borrowing cost advantage ahead, which should keep NIMs steady.
Have you explored GCC funding as an option?
We have had preliminary internal discussions, including with our parent Punjab National Bank, on whether GCC funding could be useful. However, we have not reached any conclusive discussion, we are still exploring whether it will really help us in terms of GCC funding. We have not built any numbers or assumptions around GCC funding so far.
What has been the update on PMAY?
We have extended PMAY benefits to over 5,000 beneficiaries, and our target is to double that to 10,000 by H1 (September 2026) of FY27.
What has been PNB Housing digital transformation?
Digital continues to scale well. We have rolled out a GenAI based, end to end digital platform across the organisation—from onboarding to disbursal—which every vertical has now adopted. Today, around 15% of our total leads come through digital channels, and we have disbursed almost Rs 3,000 crore from digital vertical. We are moving decisively toward a 100% paperless journey. Every customer—irrespective of how the lead originates—is now onboarded digitally.
Any fundraising plans?
No. We are a deposit taking company with over Rs 18,000 crore in deposits. We also diversify through NHB refinance, ECBs, CPs, NCDs and term loans. Given this diversified borrowing mix, we do not foresee challenges in raising funds— perhaps only after a year or two may raise funds through bonds issuance.