Non-banking finance company Karvy Financial Services is now planning to set up a Housing Finance company. The lender is yet to take the required regulatory approval but it is looking at doing so in the next financial year.
“We are looking at adding a housing finance company that will focus on low-cost housing that includes the affordable housing segment. This will typically include loans up to Rs 10 lakh,” said Amit Saxena, Managing Director and Chief Executive Officer, Karvy Finance.
Even though Karvy Finance has started doing individual home loans, the company is looking at setting up a separate housing finance company as the cost of funds that it can tap through the National Housing Board is lower, explained Saxena.
According to rating agency ICRA, the overall market size of the affordable housing segment stood at Rs 67,800 crore at the end of last financial year. The portfolio of new players in the affordable housing segment stood at Rs 6,500 crore as on March 31, 2015. ICRA added that this segment could continue to grow at a compounded annual growth rate of 50 per cent over the next three-to-five years.
With the growth potential available in the affordable housing segment, several banks are also focusing in this category. However, Saxena said that they remain unfazed with the rising competition. “Banks typically do not focus on loans of such small ticket size. Moreover, we already have an existing business and over 80 branches and a deep distribution network, so I believe we will be fairly competitive,” said Saxena.
At present, the majority of Karvy Finance’s business come from loan against property (LAP) which constitutes over 70 per cent of its loan books. Apart from this, the lender also does gold loan, business loans and small commercial vehicle loans. However, it has decided to stay away from consumption loans, personal loans and two-wheeler loans.
However, considering that the company already does LAP, it believes that it will not be very difficult to break into the individual home loan segment as the parameters of the business broadly remains the same.
Saxena also added that going forward the company will also at applying for a small finance bank licence once the Reserve Bank of India announces the “on-tap” licensing that will allow players to apply anytime.
[“Source-business-standard”]
