Mahindra Rural Housing Finance Ltd (MRHFL) is expecting an uptick in demand post-Diwali. Disbursements and collections, which were affected due to the pandemic, are also expected to come back reasonably close to normal levels by the third quarter of this fiscal.

Sees no de-growth

According to Anuj Mehra, Managing Director, MHRFL, while there may not be any rapid growth in the overall asset book this year, there will not be any de-growth either as disbursements have started and are expected to pick up moving forward.

“If we look at this quarter, the harvest has been pretty decent, which means the cash flows are expected to be good. Then thanks to the timely intervention of the government, a fair amount of money has gone into the rural economy. So, the nominal income has increased for consumers in rural India. So, if Covid is brought under control in this quarter or so, then October-December should be a good period for rural India. We are already seeing an uptick,” Mehra told BusinessLine .

While the first six months of this fiscal has been “fairly disruptive”, the next six months would be as close to normal as possible.

“I don’t see rapid growth in asset book and neither do I see a huge degrowth or contraction of book because some disbursements will happen. So, as an industry, we would be close to last years’ book or slightly better than last year as a book,” he said.

The impact of Covid in rural India was fairly contained when compared to the urban counterparts. Collections have been steadily improving on a month-on-month basis. MRHFL’s collection efficiency, which was close to 20 per cent in April, doubled in May and further improved to close to 90-95 per cent in June. However, in July, there was a slight drop in collection efficiency on account of sudden and sporadic lockdown announced in several states.

However, things are expected to come back to normal in August as the lockdowns announced by various states are slowly being lifted.

“The next two months would be crucial to understand whether a customer would be in a better position to repay. If Covid spreads more and if lockdowns become more frequent, then economic activity may drop and recovery could be impacted for some more months. But if that does not happen or happens in limited manner, then the recovery should be sooner,” he said.

MRHFL, a subsidiary of Mahindra and Mahindra Financial Services, was pretty comfortable on the liquidity front and has been able to service all its liabilities on time. The company has raised close to ₹1,000 crore, including ₹500 crore from National Housing Bank, and another ₹500 crore through NCDs.

“At this point in time, liquidity is not a problem and we are sitting on a fairly large amount of money. We have paid all our liabilities on time and over and above that we have adequate liquidity to take care of future liabilities,” he said.

Affordable housing

Affordable housing, which currently accounts for around 17-20 per cent of its total loan book, is expected to account for nearly 50 per cent of its business in the next three-to-five years. The average ticket size of the company’s affordable housing business is close to ₹7-8 lakh, against the industry average of ₹13-14 lakh, as it caters to largely underpenetrated market, he said.

The collections under affordable housing have been even better than pure rural housing finance portfolio.

“Initially for this fiscal our focus was on servicing our liabilities and taking care of our liquidity. Now with that ensured and with collections improving, we are gradually getting into disbursements. Our focus would be to encourage affordable housing. As a percentage it will grow faster than rural housing,” he said.

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