LIC Housing Finance sets retail loan disbursement target of Rs 55,000 crore for FY20

Mortgage lender LIC Housing Finance (LIC HFL) has set a retail loan disbursement target of Rs. 55,000 crore for the current financial year, according to a senior official of the company.

“For the current year, we are planning to achieve a disbursement (retail) target of Rs. 55,000 crore and so far we have made Rs. 25,000 crore of disbursements,” said Siddhartha Mohanty, MD & CEO, LIC Housing Finance here on Saturday.

The disbursement target is 14 per cent higher than the previous year retail loan disbursement of Rs. Rs. 48,187 crore. The housing loan company's project loan disbursement in FY19 stood at Rs.7,128 crore.

Speaking on the sidelines of the 22nd edition of LIC Housing Finance’s Mega Housing Property Fair, ‘Ungal Illam 2019’, Mohanty said although people are apprehensive about the real estate sector, the sector is gradually improving and showing signs of improvement.

“Within housing sector, the affordable housing segment in particular is showing good growth and we are concentrating more on this segment because it makes good business sense as well as social objective,” Mohanty added.

During the first half of the current financial year, LIC Housing Finance disbursed around Rs. 5,000 crore under Pradhan Mantri Awas Yojana’ (PMAY) credit linked subsidy scheme to nearly 25,000 accounts accounting for nearly 26 per cent of retail disbursements in volume terms and 24 per cent in value terms.

He also added that demand for office space and large godowns have increased due to the advent of e-commerce, which have given opportunity to the company.

On questions about millennials deferring their purchase decisions across segments, Mohanty said it was not the case in real estate sector.

“In fact, the average age of home buyers has come down over the years. Young people are taking buying decisions. Also, our ‘young customers’ segment is increasing particularly in big cities like Bengaluru and Chennai,” Mohanty said.

Asset quality of the company showed some signs of strain in the September quarter. LIC HFL’s non-performing assets (NPA) for Q2FY20 grew by 40 bps to 2.38 per cent.

“We are very careful about good asset quality but despite that there are some growth in NPAs. Our target is to reduce our NPA to less than 1.54 per cent recorded for FY19,” Mohanty said.

Noting that he is confident on the company’s recovery process, he said that although the statutes require them to classify some accounts as NPAs due to delay in payments, they still continue to earn revenue from these accounts with some delays.

He expressed confidence that the government’s recent announcement of Rs. 25,000 crore funding for stalled housing projects will help to revive the sector’s growth and also reduce NPAs that have arised due to stalled projects.

On fundraising, Mohanty said the company is exploring to tap external commercial borrowing and will decide on the borrowing amount and timing as and when the need for funds arise.

Currently, non-convertible debentures (NCDs) account for 76 per cent of the company’s borrowing while the remaining portion comes from public deposits, bank loans and commercial papers (CPs).

Mohanty also called the Real Estate Regulatory Authority (RERA) as a great initiative of the government. “It (RERA) has instilled confidence in the mind of home buyers and instilled discipline in the entire system. The objective of RERA is provide total transparency, so a developer has to fulfill whatever commitment he has made.”