With economic activity gradually improving post lockdown, PNB Housing Finance is closely monitoring the inventory levels of builders and asking them to start selling as demand for home loans is nearly getting back to normal, its MD and CEO Hardayal Prasad said.
"Economic activity is still at a low ebb, but it has started picking up. The economic activity in certain areas is obviously returning back to pre-Covid days, I would say. When we talk to the builders and our sales team and people who are on the ground, who go and talk to the consumers and prospective borrowers, there are green shoots that we are seeing everywhere," Prasad told PTI in an interview.
"The kind of enquiries that we used to get at one point of time, we are already almost at about 80-85 per cent of the pre-Covid level," he added.
Besides, many builders are coming up with attractive offers like free parking, other incentives and even zero stamp duty in some states.
"These are pretty good offers, there are pretty good buys that are taking place, the numbers are going up. The projects those are 70-75 per cent complete, these are the ones that are actually selling from the shelves. There is large inventory also in the country, so everybody is trying to sell wherever (feasible).
"We have corporate finance, we have construction finance. We are asking all builders to bring in the inventory and start selling it so that our loans also can get repaid," Prasad said.
PNB Housing Finance is closely monitoring inventory levels of builders, Prasad said, adding that people are now willing to buy projects that are almost 70 per cent complete.
"So the ability of the builders to finish the project on time is now becoming a very big factor," he added.
However, new projects or those where less than 70 per cent work is completed are not garnering the interest of buyers.
On loan demand, Prasad said, "If you look at the pre-Covid numbers, I think we would have reached there by October itself, in fact we might breach the pre-Covid numbers."
"Month-on-month, from June onwards till October, every month PNB Housing is seeing 10-20 per cent increase in log-ins or home loan applications, sanctions as well as disbursements," he added.
In the last quarter ended September 2020, the number of log-ins for the company improved to 17,063 from just 5,071 in the preceding quarter ended June 2020. The number of log-ins in the pre-Covid January-March quarter stood at 20,165.
PNB Housing sanctioned 11,733 loans in September quarter as against 3,288 loans in June quarter. The number of sanctions stood at 14,226 in January-March quarter.
Disbursements rose to Rs 2,444 crore in Q2FY21 as against Rs 694 crore in June quarter. Disbursements were at Rs 2,826 crore in March quarter.
"November onwards and (with) the festival season in full bloom, I expect that this will definitely move forward," Prasad said.
"We have lost already about seven months and we used to grow at double digit. Now we are only looking at say February or March numbers. One doesn't feel so good about it, but there is no growth over here because of the Covid and other things. But so long you are back to pre-Covid numbers, I think that's a good sentiment," Prasad said.
For PNB Housing, Mumbai, Delhi-NCR, Kolkata, Chennai, Benagaluru, Hyderabad, Ahmedabad, Pune, Jaipur and Lucknow are the top markets. However, it is witnessing good traction from tier II and III markets now.
"Builders have realised that there is potential in these markets. Tier II and III markets, we are seeing strong demand coming to us. With our presence in about 65-67 centres and having almost 96-100 branches, we are adequately poised to capture these markets' demand," Prasad said
Besides, the company is focusing on the mass housing segment and affordable housing.
"Unnati loans, affordable housing, PM Awas, all these remain the cornerstone of our growth story. Besides, because of the re-balancing of the portfolio that we have planned and the way we have been looking at our business, the average ticket size of the loan has come down already by Rs 1 lakh.
"I think that's very important for individual housing. When it (ticket size) comes down, it clearly means that there are people at the bottom of the pyramid who are also wanting to have a house," Prasad said, adding that loans for up to Rs 35 lakh are becoming a "very very strong" portfolio.
PNB Housing is making a concerted effort to reduce corporate loans portfolio and increase the retail book in order to focus on lower risk weighted accounts.
Corporate loans consist of loans mainly to developers for construction of residential and commercial properties, corporate term loans and lease rental discounting.
As on September 30, 2020, the company's assets under management (AUM) stood at Rs 81,221 crore, with retail AUM at 82 per cent and corporate at 18 per cent.
"On the corporate book, during first half of current fiscal, the company has sold few of corporate accounts and received accelerated pre-payments. We remain steadfast in our strategy to bring the share of corporate book down by the end of current fiscal year.
"We are closely watching our corporate book, which are in various stages of resolution, and are hopeful that some resolution will fructify during the financial year," Prasad had told analysts during an earnings concall on October 29 after Q2 FY21 results.