India Mortgage Guarantee Corporation (IMGC), the sole provider of mortgage default guarantees in the country, plans to foray into direct to customers (D2C) to expand growth opportunities for its mortgage guarantees offerings, its Chief Executive Officer (CEO) Mahesh Misra said.

“We have plans to go directly to customers and are exploring this. Our current thought process is to build a diverse enough lender base to service the whole range of direct-to-consumers. As a first step, we are in discussions with two aggregators”, Misra told BusinessLine.

“What we are looking with aggregators is to see if we can take our product to customers through them. I will help aggregators convert the leads that they bring to us through their platforms”.

Misra cited the example of the growth journey of credit bureaus to highlight that they first started with Business-to-Business (B2B) and after the market evolved only they told the customers that they can buy their scores directly and make payments directly. IMGC is also looking to adopt a similar approach.

He also said that IMGC, with a current balance sheet size of ₹ 15,000 crore, is aspiring to grow it to ₹ 1 lakh crore over the next five years.

Robust pace

A mortgage guarantee is a financial product which compensates lending institutions or housing finance companies for losses that may arise when a home owner defaults on a mortgage loan. 

The home loans market is growing at a robust pace in India. Misra felt this market for mortgage guarantees will grow a lot if some regulatory dispensation is provided. “This regulatory dispensation can be in the form of risk weights or capital relief etc or even making it compulsory. We see our balance sheet growing from ₹ 15,000 crore to ₹ 1 lakhcrore, even if this regulatory dispensation doesn’t come. Because there is demand. Our balance sheet will expand even further if regulatory dispensation were to come our way”, he added.

Currently , it is not compulsory for home loan borrowers to buy into mortgage guarantees. 

Scoring model

Misra said IMGC is ready with the mortgage scoring model that will be used internally, then rolled out externally in the next 18 months. 

“Our score is now ready for internal consumption. We now have more data. We started active development about 18 months back and now we are ready with score that we will use internally for next year”, he said.

He added that IMGC is in talks with two or three lenders to see if they wish to partner with the company while it is refining the score. “Next month we will start the process of using the score for underwriting as an additional tool. At some point in the next 18 months, we will go to the market to see if there is acceptance of this score. There is, however, widespread acknowledgement of the need to have a scoring model for non credit tested customers”, he added.

Asked about the status of implementation of IMGC’s agreement with two home loan biggies — HDFC and SBI, Misra said that he expects this to soon be a reality.  “We are already actively working with LIC Housing Finance. As for HFDC and SBI, we expect it to be operationalised in the next few months”, he said.

Misra also said that IMGC had no plans to raise capital for the next three years to fund business growth and that the company was comfortable on the capital front. 

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