HDFC has floated a distribution subsidiary "" Home Loan Services India Limited (HLSI). A wholly-owned subsidiary, HLSI, will initially market the housing loan products of HDFC and gradually begin to offer other HDFC associates' products in banking, insurance and mutual funds. | |
| Keki M Mistry, managing director, HDFC said on Wednesday on the sidelines of the Director's Power Breakfast Series that the subsidiary, floated a few months ago, is now gaining momentum. He, however could not estimate the business achieved by the entity since its inception. |
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| He said, HLSI will function independent of HDFC Bank, which also gives HDFC housing loans. While sidestepping a question on whether HDFC Bank will on its own enter the home loan segment, he said, "About 18 months ago we entered into an arrangement with HDFC Bank for housing loans." |
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| According to the understanding, HDFC Bank will provide the referrals and applications to HDFC, which will then take over, process the application, credit check the customer and disburse loans. After disbursement, HDFC will securitise 70 per cent of the loan values and sell it to HDFC Bank. |
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| Mistry said, "This arrangement increases our business, and lets the two entities focus on their core areas." This format already accounts for 10 per cent of HDFC's business. |
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| Such arrangements will assist HDFC tap the market potential. Despite the housing loan growth, India is yet to reach the levels of its Asian peers like Korea and China. |
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| The Indian mortgage market is just 2 per cent of the GDP now, a fraction of what other Asian countries that have reached 12 per cent of GDP and USA where the mortgage market represents 51 per cent of GDP. |
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| Adding to this is the 25 million units of estimated shortfall in housing in the country now. The numbers are huge as in the last 27 years HDFC, the market leader, has funded just 2.4 million units. |
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