 "Retail housing finance players witness traction among self-employed")
Despite challenges of definite income proof, retail housing finance players are find significant traction from self employed for home loans.
Average ticket size ranging anywhere between Rs 7-7.5 lakh for Aadhar Housing Finance to Rs 11-12 lakh for Edelweiss Housing Finance, home loans for self-employed are being seen as a go-to segment by these players.
So much so that players like Edelweiss Housing Finance are ramping up their presence in more number of states, buoyed by the growing number of self-employed. According to Anil Kothuri, Head, retail finance & chief executive Edelweiss Housing Finance Limited, the company hopes to grow its retail housing finance revenue by 50% from Rs 4,800 crore in FY '16 to Rs 7,200 crore in FY'17.
"We lend predominantly to self employed with the average ticket size of Rs 11-12 lakh. Some of the newer markets like Gujarat, Madhya Pradesh and Rajasthan have been good self employed and SME markets. Since our business requires detailed analysis of our clients’ businesses, at times amidst lack of proper books, we charge on the higher end of 10-13% interest," said Kothuri.
However, according to Kothuri, Edelweiss has seen less than 1% non-performing assets (NPAs) in the retail finance business, especially among self-employed.
Out of its total Rs 5,500 crore retail finance portfolio, home loans to self employed and SMEs comprise about Rs 1,500 crore each, another Rs 2,000 crore towards loan against property segment, and rest towards construction finance.
On the other hand, Aadhar Housing Finance, which currently has a ratio of 75:25 ratio of finance to salaried low income groups vis-a-vis self finance, hopes to see a shift in the ratio in near future.
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For this, the company has in recent times become more lenient towards 'no income proof' self employed and assessing their cash flows in absence of I-T returns to help them avail housing loans, said Vivek Vishwakarma, regional business head at Aadhar Housing Finance Ltd, an 80:20 venture between DHFL and IFC.
"We assess their cash flows and other books in the absence of I-T returns in order to help them avail housing finance. Currently, our housing finance portfolio is spread in the ratio of 80:20 between salaried and self employed. However, we are witnessing significant traction in the latter and in near future this ratio could grow towards self employed," said Vishwakarma.
Demand in the affordable housing segment, according to industry players, is being led by the self employed with more and more ventures being opened across the country. LIC Housing Finance Ltd Managing Director and Chief Executive Sunita Sharma too recently commented that with the average ticket size of Rs 19 lakh, the company was seeing lot of traction in affordable housing.
Meanwhile, according to Kothuri of Edelweiss Housing Finance, the overall retail finance has been growing at the rate of 25% per annum, while adding that the overall retail finance market in India currently stands at Rs 23 lakh crore.