8/6/2019 Home+Loan+Market+in+India6 (1)

http://slidepdf.com/reader/full/homeloanmarketinindia6-1 1/2

126 SUPERBRANDS

MarketThe Indian home loanmarket is comprisedof housing financecompanies (HFCs)overseen by theNational HousingBank and commercialbanks regulated bythe Reserve Bank ofIndia. For the billionplus people in thiscountry, housing is abasic necessity.The

housing financemarket draws itsstrength from theyawning demand-supply gap estimatedat 24 million dwellingunits.A burgeoningmiddle-class with ahigh percentageof working agepopulation, migrationto cities, rapidurbanisation and thebreak up of jointfamilies into nuclearfamilies are stronggrowth drivers.Taxbreaks on interest

and principalrepayment onhousing loans alsopump adrenaline intothis industry.Witha low mor tgagepenetration rate ascompared to itspeers,India offers agrowing potential forhousing finance.

Housing plays afundamental role inany nation's economy.During the lastdecade, the Indianhome loan markethas been one of themost powerful andaccurate economicbarometers to gaugethe emergence of anupwardly mobilemiddle-class.Thisrelatively short periodhas witnessed a keydemographic change:from the late 40sof yesteryearsborrowers, today, arein their mid-30s.

This is a reflectionof increasedpurchasing power andnew upward mobility.

The dynamics of thisenvironment have

been captured in the lower rates of interest,higher average loan amounts and a bounty ofinnovative schemes that have includedeverything from hire-purchase and re-financingoptions to mortgage and loans againstproperties.

This growth stor y was aided by tax rebateson housing loans,greater professionalism bybuilders and a general regard for completingprojects on time.

The collapse of international economies in2008 had a debilitating effect on the Indianhousing market. Propped as it was byspeculative buying,this over-heated sector

suffered acute damage.But by mid-2009 withthe storm appearing to blow over, the realestate market is gradually picking itself up. It isexpected that on the back of declining loanrates and a focus on affordable housing,themarkets should gain momentum by the middleof 2010 (Source:government and industr yforecasts).

Affordable housing is not an imaginative ideabut a practical imperative in today's market.With a huge shortfall of dwelling units this isthe market that will drive the entire housingfinance industr y.

LIC Housing Finance Limited (LICHFL), agiant in the home loan segment, has seen morethan 100% increase in loan approvals in the firstfive months of the fiscal year 2009/10. Itsdisbursals have grown by close to 70% as

compared to the corresponding period inthe previous year (Source: internal data).Theaverage size of the loan,too, has increased toRs. 13 lacs (US$ 27,000) from Rs. 12 lacs(US$ 25,000) a year ago.

For the full fiscal year, the company forecastsa minimum 40% rise in loan disbursementsto Rs. 12,500 crore (US$ 2.60 billion). It alsoexpects loan defaults in the year to fall forthe first time below 1% from 1.10% in theprevious year.

Housing finance annual disbursement forthe financial year 2009/10 is estimated atRs. 130,000 crore (US$ 27.10 billion) againstRs. 117,000 crore (US$ 24.40 billion) in theprevious year.

An idea of how the home finance market hasgrown can be sketched from the fact that in thefive year period between 2003/04 and 2007/08the industr y clocked a spectacular compoundedannual growth rate (CAGR) of over 30%.Sittingas it is at the junction of a government priorityof providing affordable housing to all citizens,LIC Housing Finance is discharging an importantfunction.Not only are the efforts of thecompany helping more people get their ownroof over t heir heads, they are also generatinghuge employment oppor tunities, as well ascatalysing several ancillary industries whichcontribute seminally to the growth anddevelopment of the economy.

AchievementsLICHFL has been a consistently outstandingperformer in all areas of operations.A set of

impressive figures tell the whole story. Over thelast three years,the company registered a

8/6/2019 Home+Loan+Market+in+India6 (1)

http://slidepdf.com/reader/full/homeloanmarketinindia6-1 2/2

CAGR of 34% in loansanctions,31% in loandisbursements and 25% inoutstanding loan por tfolio.Profits after tax (PAT)reflected a three-year CAGRof 38% whereas incomeregistered a 35% CAGR.

During the three-yearperiod between 2007 and2009,the company's net non-performing assets (NPAs)declined from 1.30% to0.21%, even as the company'snet worth increased fromRs. 1543 crore (US$ 321.50million) to Rs. 2234 crore(US$ 465.40 million). By anyfinancial or actuarial yardstick,this has been a commandperformance.

LIC Housing has so farprovided financial solutions toover one million customers.As of March 2009,thecompany had sanctionedloans wor th Rs. 45,624 crore(US$ 9.50 billion) whileactually disbursing Rs. 42,994

crore (US$ 8.95 billion) sinceit commenced operationstwo decades ago.

For the year ended 31stMarch 2009, the company'stotal income from operationswas Rs. 2880 crore (US$ 600million) as against Rs. 2146crore (US$ 447.10 million)during the same period in thepreceding year. Net profitduring this period wasRs. 531.62 crore (US$ 110.80million) as compared toRs. 387.19 crore (US$ 80.70million) – registering a growthof 37%.The outstandingmortgage por tfolio as on

31st March 2009 wasRs. 27,679 crore (US$ 5.80billion) as against Rs.21,936 crore(US$ 4.60 billion) on 31st March, 2008 – an increment of 26%.

HistoryPromoted by the Life Insurance Corporation ofIndia (LIC), LICHFL was incorporated on 19thJune 1989.The company launched its IPO in1994 and GDR in 2004. Its shares are currentlylisted on the BSE and NSE.The globaldepository shares are listed on the LuxembourgStock Exchange.With a spread of 158 marketingoffices in the country, the organisation hasone of the largest networks in India.This issupported by some 9000 feet-on-the-streetagents.

LICHFL Care Homes Ltd, a 100% subsidiaryof LICHFL,launched its first Assisted LivingCommunity Centre for senior citizens atBangalore in 2006.Two years later, the companystarted another wholly owned subsidiary,LICHFL Financial Services Limited.This entit ywas created for the distribution of retail financialproducts including home loans of LICHFL.LICHFL Financial Services Limited has alreadyset up 25 branch offices across the countryand plans to set up several more in thecurrent fiscal.

ProductLICHFL offers a wide variety of housing loanschemes.These include loans to individuals – including non-resident Indians – for new houses,

loans for repairs and renovations, mor tgageloans on existing property, loans for self-owned

office premises to professionals and specialschemes for employees of reputed corporatehouses.

The company also provides loans againstfinancial assets like national savings cert ificates,life insurance policies and fixed deposits. It isnow finalising a reverse mor tgage product forsenior citizens. In addition to individual housingloan schemes, the company also offers loans toreputed builders and developers for residentialprojects, as well as loans against securit isation ofrental receivables.

Recent DevelopmentsAs demand steps up LIC Housing Finance willincrease its market exposure and reach deeperinto its pockets.To meet these growing needs,the company raised funds through a qualifiedinstitutional placement (QIP) of 10 millionequity shares amounting to Rs. 658 crore(US$ 137.10 million).The company is alsoplanning to raise debt of Rs. 15,000 crore(US$ 3.10 billion) through non-convertibledebentures, commercial papers and otherinstruments during the current fiscal.

To service loans and make them moreaccessible to people, LICHFL had planned toopen 26 new branch offices in 2009/10. Ofthese,22 were thrown open to business in Aprilitself.The company also plans to launch a realestate venture capital fund in the current year.

Promotion

The housing loan market is one of the mostcompetitive in the country.A large number of

pan India players as well as ahost of local players operatewithin it. Despite fiercecompetition, LICHFL hasbeen able to maintain astrong foothold over thepast 20 years.

The company has takena calibrated decision toimprove its market visibility. In2006,it embarked on amultimedia campaigncovering TV, radio,pr int,online, outdoor,as well asorganising events.The popularLICHFL-sponsoredprogramme Blockbuster 

Budhwar  has been runninguninterrupted on FMRadio Mirchi for the pastthree years.

Another avenue forpromoting itself is the tie-upsLICHFL has with premierproperty exhibitions.It hasalso increased its distributioncapabilities by augmenting thenumber of branch offices. Inthe next three years the

organisation plans to doubleits distribution capacitythrough its in-house channeland distr ibution arm, LICHFLFinancial Services Limited.

Brand ValuesTransparency, tr ust andcredibility – these qualitiesare synonymous with theLICHFL brand.For twodecades,transparency inbusiness practices has beenthe core driver of thecompany's corporatephilosophy.The organisationbelieves in putting theinterests of its customers

above all – a belief that isaccepted and shared by

more than a million satisfied customers.

www.lichousing.com

127SUPERBRANDS

LIC Housing Finance has been a profit-makingand dividend-paying company since 1990 – itsfirst full year of operation

LICHFL was the first Indian housing financecompany to be listed overseas

The concept of a life-insurance linked mor tgageproduct was first introduced in the country by

LICHFL

LIC Housing Finance was a participant in thepilot issue of mortgage backed securit ieslaunched in August 2000 by the NationalHousing Bank

As per the Global Financial Brand Index 2007,LIC Housing Finance Limited is one of the top500 financial companies in the world

In two consecutive years 2007 and 2008,LICHousing Finance grew twice as fast as theindustry

As at 16th September 2009,the LIC HousingFinance stock is the second-best performer onthe 67-stock Bloomberg Asia Pacific DiverseFinancial Services Index in the calendar year

2009

Things you didn’t know about

LIC Housing Finance