Operating Context
SHAPE OUR MARKETS
MACROECONOMIC ENVIRONMENT
Housing demand is closely correlated to economic development and India continues to be one of the world’s fastest growing major economies. The Central Statistics Office estimates that the nation grew 6.8% in FY 2018-19, driven by strong private consumption, accommodative monetary policy, outcomes of structural reforms such as the Real Estate Regulation Act, the Insolvency and Bankruptcy Code and recapitalisation of public sector banks (PSBs), subdued retail and food inflation rates and greater fiscal prudence.
Going forward, middle class expansion, urbanisation, favourable demographics, technology and innovation, and evolving preferences will drive private consumption, while continued structural and financial reforms, fiscal consolidation and lower public debt, improved Goods and Services Tax compliance, and better governance of PSBs will support an environment conducive to business and investment.
Industry trends
Demographic
and economic
development
- Growing young and aspirational working population
- Steady urbanisation and changing lifestyles with shift in preference towards nuclear households
- Slow credit growth at banks
Mass
housing
- Greater demand for housing in tandem with population expansion
- Mismatch of demand and supply in the urban housing segment
- Underserved housing requirements of those with below-median income levels
Government’s
policy initiative
- Real estate regulations, faster approval processes and constitution of land banks to ensure greater transparency and efficiency
- ‘Housing-For-All’ (formally known as the ‘Pradhan Mantri Awas Yojana’ (PMAY) project aims to subsidise the construction of 2.95 crore rural houses and 1.2 crore urban houses by 2022; this scheme will raise per capita home ownership
- Expansion of PMAY to MIG-I
and
MIG-II - Revised limit for housing loans under priority sector lending
Impact
- New customer profiles and expectations
- Greater need for advisory services
- Market share gain for housing finance companies
- Entry of a large number of housing finance companies with a sharp focus on urban housing
- Lower income segments and customers in the informal sector to drive growth
- Adequate financial and regulatory support in real estate segment
- Demand origination in rural and semi-urban areas
- Large mortgage disbursement opportunity
Our strategic response
Customer
Delivering products and services to customers with high quality and efficiency
Asset quality
Ensuring high quality assets through strong due diligence, credit underwriting, monitoring and collection mechanisms
Average ticket size
Catering to the middleand higher middle income segments, through retail loans in mass housing
Business acquisition
Maintaining a judicious customer profile ratio, while acquiring new business and improve yield