Middle income, affordable housing book is growing fast: TFCI MD & CFO

Bali discussed the huge opportunities in hotel financing in the tier 2 and tier 3 cities

Delhi-based Tourism Finance Corporation of India (TFCI), a non-banking financial institution, is aiming to diversify and plans to keep 25 per cent of its portfolio for construction and affordable housing segment, said Anoop Bali, managing director & chief financial officer (CFO) of TFCI in an interview with Harsh Kumar. Bali also discussed the huge opportunities in hotel financing in the Tier-2 and Tier-3 cities. Edited excerpts:

 

What are TFCI’s new focus areas for funding?

 

Over time, in addition to tourism, which continues to be our core area of funding, we have also expanded into funding real estate, including residential real estate and construction projects. We also provide finance for commercial buildings and the manufacturing sector. We fund educational institutions and hospitals as well. Recently, we have introduced a new initiative to provide small personal loans with a tenure of three months. These loans are primarily targeted at non-MFI segments, such as salaried-class individuals, who can repay the loan within the three-month period. We offer these personal loans through our technology partner PayMe India.

 

How much loan disbursements is TFCI planning for FY25?

 

For the financial year 2024-25 (FY25), we plan to disburse a total of Rs 2,000 crore in loans. Out of this, approximately Rs 900 crore is allocated for  tourism and hospitality sector, Rs 500 crore for real estate, and the balance will be allocated to social infrastructure and NBFCs.

 

The book of real estate is building fast because real estate is performing pretty well right now. So, we are mostly into middle income and affordable housing. So, those segments have a good demand.

 

What kind of opportunities do you see in Tier-2 and Tier-3 cities?

 

India never had Star hotels in Tier-2 and Tier-3 cities. Instead, there were mostly unbranded hotels or guesthouses, offering smaller hotel opportunities. However, as business in Tier-2 cities grew, people started moving out, and development began to happen. Initially, there were just 4 cities with significant hotel activity, but now there are 10 major cities, and the number of emerging cities has increased to 20. The government's Smart Cities initiative also played a key role in this growth. As a result, development in these areas has accelerated.

 

Currently, India has only about 2 lakh Star-category hotel rooms, but the country requires at least 9 lakh rooms in this category. The demand is tremendous, and people are actively acquiring properties. However, there are two key challenges- one is the high cost of construction, and the other is the high cost of land acquisition. Currently, around 60,000 rooms are under development, presenting significant business opportunities for us.

 

What are your fundraising plans for the year FY25?

 

For this year, we are planning to raise approximately Rs 718 crore through various public and private sector banks, or through a debt issuance. As we are expanding and diversifying our portfolio, we need to secure the necessary funding to support this growth.