The Centrum group is among the early birds from the brokerage space to enter the home finance segment along with JM Financial, after the Modi government began to focus on affordable housing in a big manner.
Centrum Home Finance, the Centrum group’s housing finance arm that was launched last month, plans to have a loan book of Rs 250 crore by the end of the first year of operations. The Centrum group is among the early birds from the brokerage space to enter the home finance segment along with JM Financial, after the Modi government began to focus on affordable housing in a big manner. “We have just opened our first branch in Indore. The second branch will be formally opened in the third week of March in Baroda. Since we will be focusing on a hub-and-spoke model, we will have nine hubs in three states (MP, Maharashtra and Gujarat) and 37 spokes by next March,” Centrum Home Finance managing director and chief executive Sanjay Shukla told PTI.
Shukla, who was heading Centbank Home Finance (home finance JV of Central Bank) before joining the Centrum group, said that he hopes to have “a loan book of Rs 250 crore by March 2018 and Rs 1,000 crore loan book by March 2019”. On the initial equity capital, he said promoters have already infused Rs 50 crore and will infuse a similar amount shortly. The rest of the growth capital will come in from bank funds. He also said the company will not be tapping the debt market to raise funds initially. Shukla, a home finance veteran having worked with all the standalone players, was the first MD of Tata Capital as well as the first senior employee of LIC Housing, said they just tied up with sectoral regulator National Housing Bank to draw the benefits from the PM’s affordable housing scheme.
He had also worked with ING Vysya Bank, Citibank Mortgage, HDFC and Gruh Finance. In the initial years, the company will be focusing only on tier 2 and 3 towns in the four states of Maharashtra, MP, Gujarat and Rajasthan, and will be only in the affordable housing space, Shukla said, adding the average ticket size will be in the Rs 15-20 lakh range. Shukla said the company has hired around 25 now and will have 125 heads by the end of the next financial year. The Budget 2017 has proposed complete tax deduction on profits from housing projects with flats measuring 30 sqm in the metros and 60 sqm in other cities so that the government attain the goal of housing for all by 2022. A World Bank and National Housing Bank-commissioned study recently estimated the potential of the affordable housing finance segment at Rs 8.8 trillion, while the existing affordable housing portfolio is only Rs 6,500 crore.