This year, we have disbursed more than 25,000 loans worth around Rs 5,000 crore under PMAY, constituting 26% of number of loans and 24% of the loan amount in the total portfolio.
Developer loans contributed the most to the quarterly NPAs of LIC Housing Finance, CEO Siddhartha Mohanty tells Hariprasad Radhakrishnan, in an interview. Excerpts:
NPAs and provisions have gone up in Q2. Which segment contributed the most?
The NPA has gone up to 2.38% from 1.98% in Q1, and that is a concern for us. We are getting payments in some NPA accounts, and some are in the final stages of negotiation. In the coming days, I believe there will be an improvement. Developer loans have contributed the most. Home loan NPAs have seen a marginal rise by 0.2%.
What was the reason behind rise in NPAs and is there a major stress building up in home-loan/mortgage?
For developers creating premium and luxury projects, there is some problem in selling the units. Developers creating affordable housing such as under PMAY, there is no issue in repayment. Our experience has been excellent in this segment.
How easy or difficult is it today for a company like yours to raise money? How much have your borrowing costs risen?
For us, the borrowing cost has gone down and the margin has improved slightly. The composition of funds includes NCD, bank loan and public deposit. Loan rates have come down. It is competitive for us, so we are able to make some margin.
How would you describe the state of the credit markets nearly a year since IL&FS?
Credit markets are gradually improving because of various steps taken by the government. The supply side of credit is showing signs of improvement. Consumption demand will also improve in the coming days.
To what extent have the steps taken by the Centre and the RBI to ease the flow of credit to NBFCs helped companies?
The government has taken a slew of measures and the RBI has also softened the norms, enhancing the supply side of credit and it will gradually pass on to developers. For us, on the retail side, incentives under PMAY, including interest subsidy of Rs 2.67 lakh and additional tax incentive (on housing loan principal repayments up to) of Rs 1.5 lakh have improved the demand on the retail side.
Under PMAY, over the last year, the number of loans has risen by 68% and 77% in loan amount. This year, we have disbursed more than 25,000 loans worth around Rs 5,000 crore under PMAY, constituting 26% of number of loans and 24% of the loan amount in the total portfolio.