Giving a boost to affordable housing, the Reserve Bank of India (RBI) eased norms last week for home loans of up to Rs 10 lakh. CNBC-TV18 spoke with Harshil Mehta, CEO, DHFL to know the positives of this announcement for his company and the industry. According to Mehta, the new RBI guideline will largely benefit the economically weaker sections (EWS) or the low income group (LIG) segment where the stamp duty registration is anywhere between 12 -16 percent of the cost of unit which was earlier excluded from calculating the loan eligibility.Mehta believes the guidelines may also get extended for middle income group (MIG) which costs around Rs 12-15 lakh in tier-2 and tier-3 cities.
Below is verbatim transcript of the interview:
Q: Could you take us through the positives of this announcement? How will it benefit your company as well as the industry?
A: This new RBI guideline will largely benefit the EWS or the LIG segment where the stamp duty registration typically goes up to anywhere from 12 percent to 16 percent of the cost of unit which was earlier excluded from calculating the loan eligibility.
Now, with this it surely helps the borrowers to be a part of the loan so in that segment this is definitely good.
Q: At present, how much of your loan portfolio is sub Rs 10 lakh?
A: If we look at our portfolio, more than 60 percent of our home loans get sanctioned for loans up to the size of Rs 10 lakh and on the disbursement side we would be at 51 percent of the loans to Rs 10 lakh.
Q: Do you see an extension to the ticket size of 10 lakh going forward to include the middle income group (MIG) as well?
A: While this guideline is for loans up to Rs 10 lakh, we also need to keep in mind that in tier-2 and tier-3 cities even MIG unit cost is in the range of Rs 12-15 lakh. So, this limit of 10 lakh may get extended to cover for the MIG segment also which is up to Rs 15 lakh because that would surely benefit as all this falls under affordable housing but this is definitely a good move towards that.
Q: Your view on the other guidelines passed with respect to disbursal of loan upfront for the government owned and backed builder bodies like Maharashtra Housing and Development Authority (MHADA)?
A: This is definitely good and has been a constant feedback to the regulators especially when it came to statutory housing projects either by government or by statutory housing boards because they work in a different way than the private sector so this is surely a welcome sign because when it comes from the regulator it makes things a lot simpler from process perspective when you have borrowers who apply for a loan and are looking at disbursals. So, this is a good sign.
Q: How do you see this benefiting your top line and subsequently the earnings?
A: This leads to an enhancement in our disbursements because now you are including that in your loans. So, this helps you to increase your disbursements while the traction continues on the tier-2 and tier-3 cities so, this means that from a sanction perspective because you will now have more borrowers coming to you for loans and this will lead to higher sanctions. So overall, on the portfolio you can see a marginal increase on account of this.
Q: Can you quantify that?
A: We would suspect that this would be in the range of anywhere from 2-6 percent.
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