Piramal Capital in talks with RBI on milestones to achieve for housing finance tag

Piramal Capital and Housing Finance Ltd (PCHFL) is in ongoing talks with the Reserve Bank of India regarding the regression path for the various milestones to be reached to proceed with the Housing Finance Corporation (HFC) label, according to Jairam Sridharan, managing director.

For a non-bank finance company to be recognized as an HFC, the Reserve Bank of India (RBI) has specified that the minimum percentage of total assets for housing finance must be 60 percent by the end of March 2024. Further, the minimum percentage The percentage of total assets towards housing finance for individuals should be 50 percent. “The deadline for that (achieving the above criteria) is the end of fiscal year ’24. So, we have another year to go. We are in constant conversation with regulators.

“As you can imagine, we started as a company that was entirely a wholesale lending company. So, it’s difficult for us to convert overnight into a retail business.

He emphasized that the company is taking strong steps towards continuing to grow the retail side of the business. “And we have, at the full group level, reached a 50:50 mix between retail and wholesale. However, at the HFC entity level, we will continue to make efforts to meet the RBI guidance by March 2024,” said the PCHFL President.

High interest rates

On the effect of higher interest rates on the demand for housing loans, Sridharan said, “I think… maybe 3-4-5 months ago, we were saying there is no effect (of higher interest rates) on housing demand.” I don’t think we can say that anymore. There is some softening in demand that is starting to happen, particularly in smaller ticket housing.”

Small ticket purchase loans are the slowest growing segment across the industry. “Growth is there, but it is not as strong as other parts of the lending (business). Customers who are borrowing 20-25 lakh home loan are definitely feeling the pinch at the moment,” said the PCHFL chairman.