Piramal Capital and Housing Finance Ltd (PCHFL) is in ongoing discussions with the Reserve Bank of India regarding the trajectory of the different milestones that need to be achieved in order to continue with the Housing Finance Company (HFC) label, according to Jairam Sridharan, CEO.
For a non-bank finance company to be recognized as an HFC, the RBI has specified that the minimum percentage of total assets earmarked for housing finance must be 60% by the end of March 2024. In addition, the minimum percentage of total assets Total assets set aside for home financing for individuals must be 50 percent. “The cut-off date for that (achieving the aforementioned parameters) is the end of fiscal year 24. So, we have another year ahead of us. We are in constant conversation with regulators.
“As you can imagine, we started as a company that was a fully wholesale lending company. So for us to become a retail company overnight is difficult,” Sridharan said.
He stressed that the company has been making great strides to continue to grow the retail side of the business. “And we have reached, at the whole group level, a 50:50 mix between retailer and wholesaler. However, at the HFC entity level, we will continue to strive to meet RBI guidelines by March 2024,” the PCHFL chief said.
Increase in interest rates
On the impact of rising interest rates on demand for home loans, Sridharan said: “I think… 3, 4, 5 months ago, we would have said there is no impact (of rate increases) on demand. of housing. “I don’t think we can say that anymore. Demand is beginning to moderate, particularly in low-priced housing.”
Low cost home loans are the slowest growing part of the entire industry. “The growth is there, but it’s not as strong as other parts of (business) lending. Clients applying for a home loan of ₹20-25 lakh are certainly feeling the pinch right now,” the PCHFL chief opined.