National Housing Bank, the regulator for housing finance companies, is planning a slew of measures aimed at transforming the housing sector, said Sriram Kalayanaraman, MD & CEO. In an interview to Saikat Dasand Baiju Kalesh, he said the regulator wants to set a gold standard for housing prices while it wants member companies to extend more credit in housing sector rather than on non-housing ones such as loans against property, builders’ loans, etc. Edited excerpts:
What goals have you set for yourself?
Our goal is to create a one-stop shop on housing and housing finance related issues for all stake holders including the government, regulators and customers. NHB should be the institution for providing solutions by adding and enhancing its knowledge capital.
How do you plan to transform the sector?
We may be able to bring about a meaningful transformation in the housing sector, especially in areas such as affordable housing, customer’s choice and accessibility to finance, better transparency and disclosures besides grievance redressal mechanism.
On the issue of overall house acquisition cost, it is observed that the stamp duty and registration charges vary across states and could be as high 12-13%. It can be moderated to apply more or less uniformly across geographies. We are already discussing with the central and state governments on reduction in stamp duty and registration charges. For this purpose, NHB has also commissioned a study with IIM-Bangalore.
Regarding the implementation of speedier grievance redressal mechanism for housing finance, we are toying with the idea of creating an ombudsman for housing finance companies. We are also aiming to become the knowledge depository for the housing sector.We are also in the process of revamping our housing price index with land and building materials price indices under NHB RESIDEX brand, making it more aligned to the requirements of the sector.
Our dream is to make it a gold standard for housing prices in the country. We are also trying to create an early warning system, which could be a big help for housing finance companies to detect stress in the system.
How about the delinquencies now in the housing sector?
As of now, overall delinquency in housing loans is less than 1.5 %, so the sector is much better off than the other segments of the economy. Our proposed portal will help in raising the triggers in the event of stress in the system in order to sensitise the stakeholders.
How do you propose to ease the process of applying for HFC licence?
A number of steps have been taken to make the approval process for new HFCs more transparent. The applicants’ names are displayed on our website. Once they submit the required documents and we receive clearances from the regulators, we try to complete our internal process in the shortest possible time so that approvals can be expedited. On an average, one can expect the go-ahead anywhere between 90 and 120 days.
Are there sufficient number of HFCs in India?
As on date, 82 housing companies are registered with NHB. Large corporates are showing interest in the sector and this number is likely to increase. The market in our country is huge and so is the number of HFCs. Consolidation, too, may happen just like in any other industry it will happen in due course.
Are you worried that some HFCs are not funding adequately to the housing sector?
I would like to see the HFCs concentrate more on housing loans rather than non-housing loans. There are housing finance companies whose books show that 40-45% of their loans are in LAP, builder financing, etc. Personally, I would like to get that ratio to 70:30, meaning 70% loans into housing finance. Core financing to individuals should get the importance.
Any there any overseas fund raising plans?
NHB has raised funds from a number of multilateral institutions for specific areas such as affordable housing, green housing and other emerging areas of interest, and we are planning to raise about $200 million, for which we are in discussions with a couple of multilateral institutions.
What are the challenges you face?
NHB has always been a lean organisation, and we pride ourselves for our cross-disciplinary expertise. So, we are looking at how to better optimise our talent pool to achieve the maximum results. Further, the challenge is how to bring more talented young people in NHB. We have recently recruited some specialised data analytics people who would help us to build the analytics hub. We will continue to see how to tap the best talent.
The challenge is how do we raise low-cost funds, including capital. We are mandated to work on thin margins in order to benefit consumers. Currently, HFCs raise about 4-5% of their required funds from NHB. We are looking into how to increase the funds flow, particularly to those HFCs, which are catering to the economically weaker sections.
We will also work on how to make smaller housing finance companies access the bond market. One way could be to improve the credit rating of HFCs’ bond issues through credit enhancements.
What’s the latest on `housing for all’?
NHB as a central nodal agency signed up MOUs with 154 primary lending institutions for the implementation of Pradhan Mantri Awas Yojana Credit-Linked Subsidy Scheme, and disbursed a subsidy of about Rs 377 crore to roughly 21,000 households under the component. Going forward, NHB is geared to implement the scheme for middle income group households and rural housing, as announced by the Prime Minister recently.
Credits ET Realty