Piramal Capital and Housing Finance Ltd (PCHFL) is in constant conversations with the Reserve Bank of India regarding the glide path of different milestones to be reached to continue to have the housing finance company (HFC) tag, according to Jairam Sridharan, Managing Director.

For a non-banking finance company to be recognised as a HFC, the RBI has specified that the minimum percentage of total assets towards housing finance should be 60 per cent by March-end 2024. Further, the minimum percentage of total assets towards housing finance for individuals should be 50 per cent. “The closing date for that (achieving the aforementioned parameters) is FY24 end. So, we have another year to go. We are in constant conversation with the regulators.

“As you can imagine, we started off as a company which was an entirely wholesale lending company. So, for us to turn overnight into a retail company is hard,” Sridharan said.

He emphasised that the company has been making strong strides towards continuing to grow the retail side of the business. “And we have come, at a full group level, to 50:50 mix between retail and wholesale. However, at the HFC entity level, we will continue to take the efforts to meet the RBI guidelines by March 2024,” the PCHFL chief said.

Rising interest rates

On the impact of rising interest rates on housing loan demand, Sridharan said: “I think...maybe 3-4-5 months ago, we would have said there is no impact (of rate hikes) on housing demand. “I don’t think we can say that any more. There is some tempering of demand that is starting to happen, particularly in small ticket housing.”

Small ticket housing loans are the slowest growing part across the industry. “The growth is there, but it is not as robust as other parts of lending (business). The customers borrowing ₹20-25 lakh housing loan are certainly feeling the pinch right now,” opined the PCHFL chief.