Resale transactions have taken priority for now
Resale transactions have taken priority for now
Avenue to finance which was 60-70% has gone down by 20-25%, which housing finance companies are compensating by moving in to resale transactions or secondary market, since they have not been impacted by RERA.
Sachin Chaudhary, Chief Operating Officer, Indiabulls Housing Finance believes any major policy change like RERA and GST takes time to settle in as industry has to pause and realign according to the new norms. But if you look at them from the long terms perspective, all these policy changes are aligning us to the best practices applied in the developed countries.
In conversation with ETRealty Chaudhary talked about how RERA has impacted the housing finance companies(HFCs), non-performing assets (NPAs) levels in HFCs and company’s growing market share.
How has RERA impacted Housing finance companies?
Housing finance companies typically finance customers who are buying properties in the primary market. In few states we have seen that while builders have applied under RERA, the approval is taking time, so financers are waiting for the clarity on what has been approved and what has not. Hence we are struggling to disburse the loans and business has been impacted. A dip of 15-20 per cent has taken place in the business due to RERA.
Avenue to finance which was 60-70% has gone down by 20-25%, which housing finance companies are compensating by moving in to resale transactions or secondary market, since they have not been impacted by RERA. The impact is however expected to remain for short term period and for the meanwhile, resale transactions are taking priority.
Post RERA has there been any drop in the growth of housing finance companies and what growth is expected in coming years?
In the interim phase of 2-4 months, there could be a slowdown. But in the long run the growth rate would be onwards of 20 per cent. We have had good monsoon, and if other parameters of economy goes up, and more tax breaks comes-in for residential segment in the next budget, it can grow at rate of even more than 22-25%.
Housing finance companies have multiplied in the last five years. There is enough space available for HFCs to grow especially with ‘Housing for All’ scheme being initiated by the government.
Is there any relief from your end to Jaypee or Unitech homebuyers? Any discount on interest rate?
Although we have very less exposure in case of Jaypee or Unitech, we stand with our customers. Any shift from A property to B property, as both these developers have given these options to their buyers, we are shifting loans from A property to B property.
We offer the lowest possible rate to our customers. These customers might be sitting on loans with interest rates ranging between 8.75-9% and if they opt to shift we provide the interest rates as per the policy.
What is the current status of NPAs when it comes to HFCs and Indiabulls Housing Finance?
Since, HFCs are specialised entity to deliver one product while banks are present in all trades, the non-performing assets (NPAs) are more with banks than with HFCs. Currently the NPAs for HFCs are anywhere in the range of 0.3-0.5%.
Even for Indiabulls, NPAs have been historically in the range of 0.3-0.5%. Currently we are around 0.34-0.35%.
How do you see market share of Indiabulls growing in comparison to the competitors?
Due to market conditions outside India and the competitiveness created within India, foreign players have completely left which has created a prime market space having salaried customers. At the same time, public sector banks are struggling with their existing NPAs and their bandwidth to service customers is limited. Hence, some portion of this space is coming to housing finance companies.
So, around 20% of our growth will come along with the market while 10% will come from the gaining shares of this left out un-serviced portion.
National Housing Bank recently said that HFCs must follow a uniform policy for valuation of properties and has given them time till December 2017 to have proper policies in place. What is the status of Indiabulls regarding the same?
From the very start, we have made sure that we have an in-house team for valuations comprising of civil engineers and architects, which is now 200+ strong. We also go for minimum of two valuers in each case which are associated with all other leading players. So from the regulation point of view, we are already aligned and are following all NHBs norms.
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