Vastu Housing Finance Corporation Ltd is planning to enter the micro housing loan segment by tying up with self-help groups (SHGs) across the country.

“Mortgage penetration in India is just about 11 per cent of GDP, and we are just scratching the surface of a multi-decadal opportunity.

“So, in the journey of increasing mortgage penetration, there is a lot of micro housing that needs to be done,” Sandeep Menon, Founder, MD & CEO, Vastu Housing Finance Corporation, told businessline.

He emphasised that the affordable housing finance company, which currently has an average home loan ticket size of about ₹12.5 lakh, work with SHGs to grow the micro housing loan (of ₹3 lakh to ₹6 lakh ticket size) portfolio.

An SHG is a homogeneous group, comprising 15-20 women members, who first pool their savings and give out small loans to needy members. Once the SHG successfully undertakes savings and credit operations from its own resources, it can borrow from a bank or a micro finance institution to enhance its pool of resources.

As on March 31, 2022, around 67.4 lakhs SHGs had an outstanding portfolio of ₹1,51,051 crore, per MFIN data.

“Almost every home loan that we give, a woman is either the borrower or the co-borrower. We generally encourage this,” said Menon. If the lady of the household is a borrower, the delinquency rate is lower.

The Vastu chief said though his company is predominantly an affordable home loan provider, if a customer wants a bigger home loan (₹60 lakh to ₹1 crore), the same is extended through co-lending arrangement with ICICI Bank.

Assets under management

In its rating rationale for Vastu, ICRA noted that the housing finance company’s assets under management (AUM) stood at ₹4,507 crore as on December 31, 2022 ( ₹3,372 crore as on March 31, 2022). 

Menon expects Vastu to end FY23 with AUM of about ₹6,000 crore.

Investors in Vastu, which commenced operations in August 2015, include Multiples Alternate Asset Management, Norwest Venture Partners, Creation Investments Capital Management LLC, IIFL Asset Management, Pramod Bhasin, and Vikram Gandhi.