ET BFSI Leadership Exchange Summitet2020
- Prashant Fernandes – Bank of Baroda Capital Markets
- Mahesh Patil – Spectrum Investments
- Amar Merani – Xander Finance
- Stanley Maiti – Magnum Equity
- Jayesh Patel – Capri Global
- Janata Home Finance – Sumedh Gaikwad
- Areas that need to be focused on for financing are Real Estate, SMEs & MSMEs.
- Alternate financing option should be explored for these sectors.
- P2P financing needs to be regulated.
- Crowdfunding also should be regulated in India
- Ministry of Finance wants SEBI to be the regulating body for P2P Financing.
- SEBI supports fund raising by crowdfunding for special causes.
- Public Sector Banks offer loans at 11% interest rate and their loan book stands at 6.5%. They need to explore the ability to grow this loan book for incremental housing finance. This can be done by serving customers in the sub 13% category, which the NBFCs are unable to do as of now.
- Janta Finance helps the uneducated to get loans from Public Sectors banks for vehicles to run with cab aggregators.
- There are about 7000 people that they have helped since inception.
- They also monitor the day-to-day working of these vehicles to avoid delinquency.
- Public Sector banks offer lower interest rates as compared to NBFCs which is in the range of 16%-18%. That is the main reason why they are approached
- They are also in the process of extending their services for affordable housing finance.
- They intend to create a marketplace clubbing affordable housing with affordable housing finance – a marketplace converging bankers and builders.
- They are operational in Mumbai, Delhi, Lucknow and Jaipur.
- Social Financing is on a rise.
- Reputed educational Institutes have the Alumni coming forward and financing new students.
- Banks also need to focus and invest in affordable housing.
- Priority Sector Lending (PSL) requirement for banks should also rope in affordable housing.
- 3% of incremental deposits need to be reinvested as well.
- There is a huge demand for affordable housing but the supply is unstructured.
- Affordable housing finance is also high on delinquency.
- Housing Finance should largely depend on and be given on projects that have economic activities around them
- Effects of RERA implementation are yet to be seem for the affordable housing segment.
- Small players in the affordable housing sector will be the most affected by RERA. However, the Margins in Affordable are very thin.
- Cost of land acquisition, permissions, construction and marketing add up to Rs.2000 – Rs.2200 per square feet.
- Builder funding is highly under-served, but RBI needs to relax norms for the same to flourish.
- The gap in financing for construction also needs to be addressed.
- Land funding i.e. funding for land acquisition is currently being served by NBFCs with a 19%-20% interest rate.
- BOB Finance serves SMEs and large corporates also.
- They are looking for funding in unconventional distribution, web aggregation & distribution of financial services products.
- Getting finance for distribution of financial services is a challenge.
- Health advisory services have been added to the services offered by online healthcare services distributors, however the margins are thin.
Jayesh Patel and Mangesh Patil also concurred with a lot of inputs mentioned above
A small round-table discussion should be organised by The Economic Times to discuss affordable housing finance. Institutions like BOB Capital, SBI Capital, ICICI and HDFC should be invited as financers and companies like Janta finance, Capri Global and Spectrum Investment should be invited to discuss and put forth their specific needs.