‘There is big growth in small-ticket loans’

Small ticket housing loans have been growing rapidly in the last few years, says Anil Sachidanand, MD and CEO of Aspire Home Finance Corporation. The NBFC, a subsidiary of Motilal Oswal Securities, has built a loan book of ₹2,600 crore in about 25 months since inception. Excerpts from an interview.

What has helped Aspire’s growth in the last two years?

Our loan book growth is entirely from retail lending. We specialise in small-ticket home loans, with an average size of ₹10 lakh. We have lent to 26,000 customers and 85 per cent of our home loan customers are first-time home buyers. The strong growth was from our tilt to rural customers in the lower middle income segment. We do not offer loan against property or other property-based loans, but focus mainly on loans for home ownership.

We follow the branch banking model where every customer in our portfolio is physically met by our originators and processors multiple times.

Our branch heads personally know the clients, their aspirations and needs. This understanding helps us to customise our offerings.

Is your customer base different from the typical urban home loan customer segment?

The dynamics of the two groups are very different. One, the loan-to-value in an urban home loan may be over 80 per cent; in small ticket loans, the desire is to borrow less and the so the ratio is under 70 per cent.

Two, historically urban customers purchase a home early in their careers, when they are 28-32 years of age; non-urban borrowers are older - about 35-38 years old - when they take a home loan.

Three, urban loans are repaid in 8-10 years; small ticket loans have a shorter average life, seven-eight years.

Four, loans are taken for under-construction properties in urban areas; rural customers tend to buy homes that are nearly done or construct their own homes.

What are some factors that may help home loan growth now?

The Seventh Pay Commission would help with improved fund flow as well as more monthly cash flow. This would influence home purchase and loan decisions. In the rural segments, urbanisation is helping land monetisation and many people desire to own a home with these funds.

Do you see any secular changes that will influence small-ticket home loans in the long term?

One, there are more joint families in rural areas than in urban locations. But the idea of larger families is changing and the break-up of joint families is creating more demand for homes. Two, partition of jointly-owned properties is happening sooner than in the past. The younger generation is getting their share early on. They want to build or buy a new home as they get their share.

There are many home loan providers now. Is there enough market for all or would there be consolidation?

Two decades ago, there were four home loan providers, but there are 76 now, with 8-10 more waiting for approval. Growth was 16-18 per cent when there were only four; growth continues to be just as high now for all. So, there is room for all. Mortgage to GDP ratio is just 9 per cent. This needs to improve, aiding 25 per cent annual growth even if more players enter.

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