Aadhar Housing Finance, which specialises in providing loans towards affordable homes, is looking to slow down its business in Bihar, West Bengal, Jharkhand and Orissa due to rising delinquencies, said Rishi Anand, managing director and chief executive officer. In its first results after listing on the exchanges, Anand added that these states have shown the highest demand for affordable housing loans in the country but due to concerns on borrowers’ credit repayment behaviour and delinquencies, the company plans to tap the brakes.
Additionally, Anand said that the company may think of adding a private sector bank as a partner for its co-lending business. Aadhar presently has co-lending tie ups with two public sector banks.
More details from the conversation:
You faced pressure on your asset quality in Q1…
We have seen that the entire housing finance industry operates this way and there's a seasonality impact. Our GNPA (gross non-performing asset) ratio was at 1.31 versus 1.08 in the last quarter. The repayment part from the borrower is delayed in this season and quarter. This affects the numbers and this is an industry-wide phenomenon.
How were your disbursements in the quarter?
In this quarter, we have gone to a new state and that is Himachal Pradesh. So now we are in 21 states. We opened one branch and we will look for more opportunities in that. And as we move ahead, we will look at expanding about 75 branches a year,
Some of the prime states for us are Uttar Pradesh, Maharashtra, Madhya Pradesh, Gujarat, Rajasthan, Andhra Pradesh and Telangana. And we have launched a programme called Deeper Impact where we pick up small talukas, small districts, go and reach out to those customers and look to open branches there. For this, we have picked up six states—Rajasthan, Uttar Pradesh, Maharashtra, Andhra Pradesh, Telangana and Gujarat
And are you seeing pressure or a slowdown in some states?
If I am slowing down business in some region, it is because of the credit behaviour and rising delinquencies. And we see this pressure is across the industry.
In the east, West Bengal, Jharkhand, Odisha and Bihar are the states. Collection is difficult. So we'll go slow and we do not want to expand. But the other side of the coin is, in terms of demand in the affordable segment, these states are at the top of the chart.
How are you looking at the definition of affordable housing? Is there anything you have proposed to the regulator or the ministry?
There is too much confusion on the definition. Rating agencies have a different definition of affordable. For example, they would say low-income, they do not say affordable first.
We represented this time as an industry to enhance these limits. The loan value for affordable housing should go up because we have seen that in the last five years, the cost of construction has almost doubled.
How is your co-lending business? Are you looking at adding partnerships?
In co-lending, we have entered into a partnership with UCO (Bank) and PNB (Punjab National Bank) and do about Rs 50 crore a month for now at least with both the banks.
We might get into one private bank. We have two public sector banks but one private one is advisable. We have it in mind, we will explore something.
Lastly, can you give some outlook on your growth and disbursements?
For this fiscal, we have been guiding that we will grow our AUM (assets under management) at about 20-23 percent and we are completely on track.
And we will look at growing our disbursement at 18-20 percent. Our profits are likely to grow upward of 25 percent.
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