CHENNAI: The housing finance space is considered to be booming. Balachandran Muthusamy, Chairman of the newest player on the block, Sasvitha Home Finance tells CE why the company is different from
its peers.
When did this idea take root?
I have been a career banker for almost 40 years. I realised that housing is one area which will be given a lot of thrust in days to come. The Government of India has been at the forefront of providing housing to people and subsidies through the National Housing Policy (NHP). The National Mission on “Housing for All by 2022” has also triggered a lot of action in the affordable housing space.
What makes Sasvitha Home Finance different from the numerous other players in the space?
Financing for housing is nothing new but most of the well-known establishments are focused on the organised sector — those with monthly salary slips and those who file I-T returns. Even most of the people who approach for housing loan assistance are from urban areas. We wanted to cater to the unorganised sector and take housing finance to tier-2 and tier-3 cities which have been underserved so far. We are not the first to do the same but the pie is so large that we felt that there is always room for new entrants focussing on certain geographies that we are acquainted to and servicing certain segments where we are confident of reaching out and making an
impact.
How do you see government subsidies helping to put the limelight on housing?
The Prime Minister’s Credit Linked subsidy scheme for urban house owners is a big boon. People in the economically weaker sections and middle-income group who want to go for homes for the first time depending on their income strata, can avail subsidies ranging from R6 lakh to R9 lakh.The great advantage of this interest subsidy scheme is that repayment burden will be reduced. But as a housing finance company, we will not restrict ourselves only to this and will look at the feasibility of financing such people with or without subsidies.
Where does your tenet of ‘environmental consciousness’ come into play when speaking about affordable housing?
Governance, social responsibility and environmental consciousness are the pillars. We will also ensure that we keep in view the environmental concerns. We will be developing the right kind of low cost housing technology that will help people go in for quality shelters. Affordable housing does not mean only cutting costs in construction. It could also mean a house which provides a good environment for living and is complying with the environmental norms and needs of the place.
What is Sasvitha’s outlook for the years to come?
Our plan is to first get into tier 2 and 3 towns and smaller places in Tamil Nadu. After this, we will look to expand in Andhra Pradesh and Karnataka. We are looking to open 10 branches in Tamil Nadu in the first year and 50 branches in five years with a hub-and-spokes model. Our loan book size is expected to be R2500 crore with loan sizes of around R10 lakhs for individual houses and a certain part for loans against property for the period.
How is Sasvitha Home Finance going to hedge the risks involved with servicing those in the unorganised sector?
People think that financing lower-income groups in the unorganised sector means the likelihood of defaults is more. But it is our opinion that it is not all that bad. According to our business plan, we feel our Non-Performing Assets (NPAs) could be anything less than 1 per cent. An absolute system for monitoring is a must and it needs to be followed up periodically. Any potential default has to be identified in advance and steps should be taken to see that there is no transgression to default.