Average cost of funds at 9.2%; further declines soon: Repco Home

With enough cash from deposits, the banks slashed interest rates significantly in last few days. The move is a welcome step for small finance companies like Repco Home Finance, whose Managing Director, R Varadarajan, says the move would help in bringing down cost of funds for the company.  Repco's average cost of funds currently stants at 9.2 percent, says Varadarajan adding that its loan book is also increasing in size, with over 70 percent of its book falling under the affordable housing category.But small housing finance companies don't cater to the salaried. Instead, it provides loans mostly to the unorganised sector for affordable housing. After the cash ban, giving loans against property to this part of the society could cause difficulties for these NBFCs, says Santosh Singh, Head Of Research India At Haitong Securities.Also since the interest rates are falling, there will be a significant fall in yields which will now impact margins for the housing finance companies.Watch video for more.