 "loan, mortgage")
India Mortgage Guarantee Corporation (IMGC) — in which two Canadian financial institutions, Enact and Sagen, hold 82.4 per cent stake — expects to provide guarantees worth Rs 7,000 crore in the current financial year (FY24) ending March 2024, up from Rs 4,500 crore in FY23, on the back of thrust from lenders for affordable housing.
Mahesh Misra, IMGC’s managing director and chief executive officer, said the company was in talks with three banks and one non-banking finance company to provide the guarantees by March 2024. The corporation intends to scale up the activity of writing cover to Rs 11,000 crore in the next financial year (FY25).
The mortgage guarantee works as a shock absorber and supports banks to increase their lending in the affordable housing finance segment which carries high default risks.
The primary objective is risk mitigation for the lending institution by providing a backstop against credit failures and credit defaults. It has helped over one lakh families to realise their dream of owning a home. India’s Gross Domestic Product (GDP) is expected to grow upwards of six per cent, and housing and home finance have a major role to play in driving this growth, Misra said.
Dwelling on the shifts in housing finance markets in the last five years, he said the housing finance portfolio has grown from Rs 22 trillion in 2019 to Rs 33 trillion now. “The annual housing finance originations have moved from 0.6 million in 2019 when we last had this conclave to 0.9 million today,” Misra said.
IMGC guaranteed just about Rs 3,000 crore in 2019. “We have grown eight times since then and guaranteed about Rs 24,000 crore,” he said, adding that the interest rates have also moved from 8.5 per cent in 2019, which later declined to 6.0 per cent, and are now inching back to 8.5-9 per cent range.
According to ICRA, the corporation’s business trajectory showed slower-than-anticipated growth in mortgage guarantee business with cumulative loans guaranteed amounting to Rs 21,131 crore and assets under guarantee (AUG) of Rs 16,466 crore outstanding as of June 30, 2023.
