Joined: 01/Jan/2006
Location: India
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Posts: 18403
Posted: 13/Dec/2007 at 9:54pm
Will check this but a friend of mine owns a percentage stake in this company.Will get his input as well.
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Growing middle class and housing shortage trigger race in home loan segment.
A clutch of foreign and
domestic players is entering the mortgage finance market and vying for
a share of the robust home loans segment.
The major companies
including US-based E*Trade (through IL&FS Investsmart), AIG, India
Infoline, Mahindra & Mahindra Rural Housing Finance, DBS Chola,
Fullerton India, Barclays Finance and Societe Generale, among others.
Rapid growth in the
mortgage sector, coupled with the 10th Five-Year Plan estimates a
shortage of 22 million dwelling units, is luring these entrants to
finance the Indian middle class dream of owning residential property,
according to experts.
While most global
players have entered through the acquisition route — Barclays bought
Chennai’s Rank Investments, AIG bought Weizmann Homes, E*Trade bought
into IL&FS Investsmart — others are entering the home loan market
through joint ventures. For instance, BNP Paribas formed a joint
venture with Sundaram Home Finance and Societe Generale forged a tie-up
with the Apeejay group.
Recently, India
Infoline received $77 million (Rs 300 crore) from emerging markets
expert Richard Chandler’s Orient Global, a part of which will be
utilised for India Infoline Housing Finance “to provide support for the
growth of housing for the Indian middle class”.
Currently, the market
size of housing finance is estimated to be close to Rs 1,50,000 crore,
which accounts for only 30 per cent of the total market requirement
(this is the formal sector).
There are close to 42
players in the home loan segment, of which only seven are very active,
including HDFC, LIC Housing, GIC Housing, Dewan Housing, Can Fin Homes,
Gruha Finance, PNB Housing Finance and Hudco.
“We already have a
non-banking finance company licence and we will focus in the area of
financing the customers’ needs and mortgages,” IL&FS Investsmart MD
and CEO Leslie Whiteford had told Business Standard in an interview
last week.
A senior executive of
National Housing Bank (NHB), which regulates housing finance
institutions, said it was looking to allow stable players with
disciplined lending to tap the domestic market.
“We are looking at
stable players with disciplined lending. The market should be served in
a sustainable manner as the size of the market is huge and still quite
under-penetrated,” he said.
Market players said
the potential in the mortgage segment was tremendous, which was
attracting a lot of new players into the segment.
Over a period of
time, players may keep 70 per cent of the risk in their books and will
offload the rest 30 per cent in the market.
Micro Finance in short http://www.it.iitb.ac.in/~it625/web06/web05/submissions/portal/Microfinance_Portal.pdf _________________________________________________
By the end of 2009, SKS wants to increase its UP client base to 5 lakh from the existing 75,000 and increase its presence to 40 districts in the state from the current 18.
“Later we will move ahead to Haryana, Himachal Pradesh, Punjab and Delhi, which would be lending to the urban poor,” Rao added.
The firm’s operations in the northern states of UP, Bihar and Rajasthan were initiated toward the end of 2006. The repayment rate has been 99.5% in these areas, Rao said.
SKS is offering solar lamps to its clients in Bihar, Maharashtra and other states where the villages are not provided electricity.
Asked whether the push north was coming at the behest of investors, who have infused money in more than three rounds of fund raising, Rao said, “It was our own decision and there was no demand from the investors. If the expansion helps SKS to grow, then it is in the interest of the investors as well.”
“About 40% of our revenues still come from the south and the balance comes from Orissa, Maharashtra, etc. We are adding new products to the southern areas. We have started mobile banking in Andhra Pradesh. There is introduction of market linkages, health insurance, grocery dealings and we would rope in an insurance partner to offer a structured livestock insurance product
Life can only be understood backwards—but it must be lived forwards
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