The typical divide between banks and non-banking financial companies (NBFC) will shrink, according to Yes Bank executive director Rajan Pental.
“I think the typical divide between NBFC and bank is going to shrink. Earlier, there was a clear demarcation that NBFCs will be in the deeper markets and will play at a high interest rate, whereas banks will be in their own areas of expertise. But, banks are now going deeper and NBFCs are coming into urban areas. That price difference is finally shrinking,” he said.
Pental added that everybody has their own clientele and their own price points. “Ultimately, the customer is interested in the service that is being rendered. I do not think the bank or NBFC should go beyond it. We sell a loan requirement and not the product,” he said.
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“There are certain client profiles that banks would not have the appetite to touch while NBFCs would have the appetite and expertise to lend to these customers. That gap may still remain but nothing beyond that.”
He also believes that the demand for home loans will remain strong even as these loans are likely to get pricier going ahead.
“This time, the home loan buyers are real buyers. So the consumption pattern is clearly emerging. There is also an extra margin since people did not spend during the pandemic. People have also seen their investments growing with savings interest rates going up. So, people have conserved some money so there is a good down payment happening. There is good demand but this demand is for consumption, which is the best thing that could happen to the industry,” he said.
“This time, people want the key of the house when they are looking for a house. This means that the process becomes highly secure from a financier’s perspective. You are not taking a punt on the builder and you are not unsure about the lack of delivery of the end product. That risk has gone out. I think it(home loans) is a lovely product to be in. It is going to show good growth even when the interest rates move up. People would not mind paying extra equated monthly installment over a period of time. The demand would continue even if there is an increase in the price of the inventory,” he added.
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Apart from this, the bank is focussing on expanding its affordable housing, loan against property, automobile loans, used-car loans, personal loans, and micro, small, and medium-sized enterprises (MSME) segment.
In the recently announced December quarter result, the bank disclosed that its loans grew 10.4% year-on-year (y-o-y) as on December 31. Retail advances comprised 44% of overall advances.
It expects its advances to grow at a compound annual growth rate of 25%, and its MSME portfolio to grow at 30-35%.
On the corporate segment, the bank will continue with its strategy of not being over-exposed to any specific sector, Pental said.