Last month, Poonawalla Fincorp Ltd announced the sale of a controlling stake in its housing subsidiary Poonawalla Housing Finance Ltd to Perseus SG Pte Ltd, an entity affiliated with TPG Global. This was the third ownership changes in three years noted as a unique episode in corporate India.
Post this major development, Manish Jaiswal, Managing Director & CEO of Poonawalla Housing Finance (PHFL) talked with ETBFSI’s Vikas Kumar over his plans for the next 3 to 5 years, how the business is coping, and the trends in affordable housing finance business.
Q: Three ownership changes in three years. How is your business coping with this situation?
The shift from promoter ownership to globally eminent Institutional Investor, validates our company’s global acceptance and paves the way for us to realize our unlimited potential.
Even prior to formal regulatory approvals, given the decision of ownership change to globally renowned TPG and the company’s own performance, we have raised over Rs 3000 crores during the transition period of which almost 25% (Rs 800 crores) were raised through bond markets through marquee names. That establishes the various stakeholder acceptance of our move towards stronger solidity.
At PHFL, we’ve taken a strategic approach to ensure continuity for all stakeholders. Our reimagined business model is centered around providing dignity of living to customers in the informal sector in semi-urban and peri-urban markets. Recognizing their reticence and hesitance to approach us, we are committed to serving them directly through attentive listening and comprehensive understanding.
As an outcome, we’ve more than doubled our unique customer base in the last 3 years from 27,000+ customers in FY19 to 60,000+ customers in FY23 and that’s driven by our stable and committed team.
Q: How do you see the rise in Affordable Housing Finance market share?
The growth in affordable housing finance market from 1% to 6% in the last decade reflects transformative changes in affordable housing finance. It is an outcome of several factors including Government initiatives like “PMAY” and “Housing for All” and certain socio-economic developments.
A burgeoning middle class and improved GDP per capita, a growing need for more per capita per square feet space, and an increasing number of nuclear families are altering the rental-to-EMI ratio, making homeownership more accessible.
With a young, aspirational population and rising financial literacy, demand for affordable housing solutions will continue to rise and within a decade we will see a double digital market share.
Q: India’s mortgage-to-GDP ratio is low compared to countries like China, Malaysia, and Singapore. What will facilitate India’s breakout into the next league of growth?
India is already on a strong growth path with respect to credit demand and access across all strata of society. Yet, the breakout will be largely facilitated by this unprecedented digital revolution that India is experiencing today. Digital literacy, availability of data, and strong digital infrastructure are facilitating awareness, access and inclusion at a breakneck speed and it is upon us, the lenders, to catch up the speed.
Q: What loan book size that PHFL expects to achieve over the next 3 or 5 years?
We’ve maintained a trend of doubling our loan book every 3 years over the past 6 years and are growing at a ~30% CAGR over the last 4 years. We expect to continue this growth trend and even strengthen it further in the coming years.
We are investing heavily in our digital capabilities and that is adding significantly to our scale and agility. Additionally, we are highly committed to the ESG principles so we are certain that we will tread a “responsible growth path”. We will continue to have meaningful & risk-calibrated growth to maintain our asset quality, which is amongst the best in the AHF space.
Q: How is digital penetration helping the affordable housing finance segment grow?
Digital penetration is a catalyst for affordable housing finance growth, enhancing accessibility and customer experience. At PHFL, we’ve pioneered digital innovations and will transition to agile systems that create a defining moment in the AHFC space.
For Instance, PHFL’s Loan management system allows intuitive document uploads, real-time progress tracking along with instantaneous validations. The customer onboarding journey is digitized including Digital stamping and E-signature which has streamlined operations and reduced carbon footprint through paperless processes from onboarding to disbursement with quick turnaround time.
Customer self-service portal enhances transparency, enabling customers to access details and make payments.
PHFL has formed a specialized team of CROPSIT (Credit – Risk – Operations – IT) who are jointly working to leverage digital penetration and make customers’ experience seamless. The team is developing a robust system where if the customer’s mobile is linked with Aadhaar, the system can fetch the data linked with Aadhar enabling minimum documentation and faster turnaround time.
Q: How will the new avatar of PHFL or your 3.0 version look like?
PHFL is well capitalized, and poised to sustain its outperformance in one of the fastest-growing industries in India. PHFL 3.0 reflects innovation, inclusivity, and transformative impact on affordable housing finance in India that we intend to attain through our 10-fold charter covering: Digital Integration, Financial Inclusion, ESG Commitment, Strategic Alliances, Empowered Learning, Global Insights, Personalized Focus, Agile Support, Community Enrichment, Amplified Impact.
