A number of housing finance companies (HFCs) and private equity (PE) players are training their eyes on the affordable home segment (₹10-30 lakh), even as the Centre has made ‘housing for all’ one of its key themes.

Last month, the Centre had extended the Credit Linked Subsidy scheme under the Housing for All by 2022 to loans of value up to ₹12 lakh (from the ₹6 lakh earlier) and also added the middle income category to the economically weaker section (EWS) and lower income group.

HFCs are looking at peripheries of the big cities — and even tier 2 and 3 cities — to widen their portfolio.

For example, National Housing Bank, a subsidiary of Reserve Bank of India, said that it had received 82 applications for housing finance and it was receiving enquires particularly on affordable housing finance.

“The government’s decision to provide interest subvention for loans up to ₹12 lakh under the Pradhan Mantri Awas Yojana (PMAY), coupled with an increase in the number of homes to be built in rural areas under PMAY by 33 per cent, is expected to boost low income housing, primarily in peripheral areas of urban localities across the country and in tier 2 and tier 3 locations,” said Ramratthinam S, CEO, Muthoot HomeFin.

Tata Capital launched the Prapti home loan scheme four months ago to target the low-income segment. It is now planning to extend the scheme to other smaller cities with viable growth in the housing segment. The Prapti scheme offers loans starting at 4 per cent through the PMAY. The company said it lends anywhere ₹3-10 lakh under the scheme.

Govind Sankaranarayanan, COO, Retail & Housing Finance, Tata Capital, said: “The loan scheme was launched keeping the smaller-ticket size in mind. The Prapti scheme has shown significant growth. We are typically looking at projects which are in the periphery of metros or smaller towns.”

DHFL too said that it is looking to increase its loan book particularly in the affordable segment. Said CMD Kapil Wadhawan: “We are taking focused steps to bring digitisation in the housing finance segment and to come up with innovative solutions tailored to customer requirements. We are also rapidly consolidating our distribution focus on tier 2 and tier 3 cities.”

PE firm Brick Eagle and affordable housing venture Xrbia are two players who have set aside corpus focusing on the affordable housing category. Xrbia, for instance, offers ‘No income proof home loan schemes’ directly to home buyers in the informal sector. It has also set up its own corpus of ₹1,000 crore for this loan product.

Last year, International Finance Corporation (IFC) said it is looking to invest up to $38 million in three housing finance companies in India.

IFC has already invested in Aspire Home Finance Corporation, Micro Housing Finance Corporation and Aptus Value Housing Finance India through non-convertible debentures.

Each of the three firms is focused on retail home loans with an average ticket size of around ₹10 lakh.

The housing shortage is expected to increase from the current level of 19 million units to 25 million by 2021.

“Assuming an average ticket size of ₹25 lakh per unit, this translates into a market potential of ₹6.25 trillion for affordable housing projects,” said K Ravichandran, Group Head, Corporate Ratings, ICRA.

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