LIC Housing Finance Aims to Boost Affordable Housing Portfolio by 25% in Two Years

LIC Housing Finance is charting a path to significantly expand its share of affordable housing loans within its loan portfolio, aiming to reach 20-25% within the next two years.

Mumbai, February 6, 2024 – LIC Housing Finance, the home finance arm of the insurance giant, is charting a path to significantly expand its share of affordable housing loans within its loan portfolio, aiming to reach 20-25% within the next two years, revealed its Chief Executive and Managing Director, T Adhikari, in a press briefing today.

Adhikari disclosed that the company experienced a modest 5% loan growth in the December quarter due to internal restructuring and management transitions. Since assuming office in August, he highlighted the company’s historical focus on the salaried and high credit score segments, which has somewhat limited its engagement in affordable housing finance.

Presently, affordable housing comprises 8-10% of the portfolio, and the company is resolutely targeting a surge to 20-25% of the loan book within the stipulated two years, as stated by Adhikari. He emphasized the substantial growth potential and wider margins associated with this segment.

Acknowledging the significant role of government initiatives like the PM Awas Yojana in fueling demand for affordable housing, Adhikari expressed optimism about the company’s prospects in this sector.

While affirming a positive outlook for the overall real estate market, Adhikari noted intense competition among financiers regarding lending rates for realty projects, with rates plunging as low as 8.75% per annum.

Addressing concerns about non-performing assets (NPAs), Adhikari revealed a cautious approach, highlighting a gross NPA ratio of 34% on project loan exposure. He attributed the slower loan growth partly to internal restructuring, which included transitioning to a new lending platform capable of digital onboarding and decentralizing credit appraisal to 44 recently established cluster offices.

Despite acknowledging the impact of management changes on growth, Adhikari remained optimistic about achieving normal levels of loan book expansion moving forward. The company aims for over 15% growth in the loan book for FY25 and plans to discuss strategies in an upcoming board meeting scheduled for March.

Regarding the HDFC twins’ merger, Adhikari mentioned no significant alterations for home financiers, though LICHFL has experienced some favorable outcomes on the liabilities front.

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