Tata Capital Housing Finance is expecting to end FY24 with a loan book of over ₹50,000 crore, a rise of over 29 per cent on year, buoyed by the housing demand that is fuelling the housing finance segment. 

The company is growing faster than the industry’s growth of 15-17 per cent and expects 25-30 per cent growth next year as well, according to Managing Director Sarosh Amaria, who added that the lending was very ‘responsible’. 

Responsible lending is reflected in its low gross NPA and net NPA ratio of under 1.5 per cent.

“We have been a very cautious player all through. We believe in responsible growth. While our company has been growing for over 30 per cent for the last couple of years, the growth is very, very responsible. We are growing much better than the industry is . But at the same time, we are very cautious of NPAs. We are very cautious about how we grow,” Amaria told businessline.  Excerpts.


There has been a resurgence in housing demand and, consequently, in housing finance. How do you see industry growth and your own growth?

A. The housing sector has been on a good path for the last couple of years. Most companies have shown growth in the housing sector, and so has the housing finance sector. Obviously, the GDP is consistently growing. It will depend on which player grows faster, but we will see 15-17 per cent housing finance growth. 

Pune has grown well. NCR has really recovered well after what it went through a few years ago. In Hyderabad, Bengaluru, and Chennai, we have seen a good price increase. How much it will sustain is to be seen. We have been a very cautious player all through. We believe in responsible growth. While our company has been growing for over 30 per cent for the last couple of years, the growth is very responsible. We are growing much better than what the industry is growing. But at the same time, we are very cautious of NPAs and about how we grow.

We are aiming for a 25-30 per cent increase from what we ended last year. We ended up with ₹47,000 crore of assets in December. Hopefully, we will cross the ₹50,000 crore mark.


Could you elaborate on your loan portfolio?

Our loan book is roughly ₹47,000 crore as of December-end. We are primarily into retail. We have two products: home loans and home equity, which is a loan against property. And within that, we are both in the prime segment as well as the affordable segment. About 84 per cent of our book is retail, and the remaining 16 per cent is construction finance. We don’t want to be only in the corporate or construction finance segments. We need to understand the risks there. But we have a good book of close to ₹8,000 crore in construction finance.

The retail segment is roughly close to ₹40,000 crore, out of which around ₹28,000-29,000 crore is prime and the balance roughly from emerging markets or tier 2, 3 cities.


What would be the average loan size?

The average ticket size of a home loan is around ₹27-28 lakh. It is slightly higher for the prime segment and ₹17-18 lakh for the affordable segment.


Does the fact that house prices have increased so much concern you? 

Absolutely. So that’s why I keep using the word responsible because we’ve seen in certain markets where price rises have been a sign that does concern us. While you see certain areas where under-construction properties are experiencing some stress now, our loan-to-value ratios are in the range of 50 to 60 per cent. So, even if the valuation of those properties falls by 10, 15, or 20 per cent over a period, it will be very secure.


You are expanding into Tier 2 and Tier 3 cities too. 

Just two years ago, we were in 80-90 locations pan-India. Last year, we crossed 200 locations. So, we want to proliferate and go to Tier 2/3/4 cities. We will expand. The growth will come to us. We get better margins in small cities, and our growth will be driven by these emerging cities. There is competition; there’s private sector as well as public sector banks out there. There are pockets. Somebody’s strong in the north; somebody’s strong in the south. We are a national player, so we have to compete with all of them pan-India.


How do you ensure the quality of your assets on the mortgage side?

We see some of the assets being acquired and the valuation of the security, which is sometimes a bit of a question mark. We don’t take risks on security at all. We want our mortgages to be perfect. We don’t do certain asset classes where we feel they’re only affordable or in emerging markets where our mortgages could be imperfect. So it’s okay if we do 1 to 1.5 per cent less in those markets. If competition is at 16 per cent, we will be at 14 per cent. But we want our titles to be absolutely clear. We want our mortgages to be perfect. So, we will never do imperfect security.


On the construction finance side, how do you see the business growing?

In construction financing, we want to work with good developers. We have around 180-200 developers that we finance in this roughly ₹8,000 crore assets. We want to work with the best of them. The risk is higher. In under construction, the key here is monitoring — whether your money is coming on time, is it flowing, and are your RERA approvals in place. So, monitoring is the key for us and we want to continue with that. And we want to grow with responsible and good developers. 

Today, 93 per cent of our book on the developer financing side is residential. We do very little commercial. Our strategy will be to work on the residential side, on the construction financing side, because we see that as self-liquidating with assets. I think we will see that segment also grow by 30-35 per cent. 


You were planning to launch a unified credit management and digital lending system. What’s the status of that?

A lot of work is being done on the data to see what kind of customers are coming to our site — what part comes from our website and what part needs data, which can help reach out to these people to take digital loans. This sector cannot be completely end-to-end digital because you have to do a valuation and a title search. It will be a matter of time that the whole digital game will also unfold in housing finance. In our ₹1,800 crore of business, roughly ₹150 crore happens through the digital channel.