Tatas to raise Rs 4,000 cr from NHB, bonds market in mega home loan push

Loans to be offered to both retail and developers; funds being raised amid 13% expansion in loan portfolio over six months to September

Tata Capital Housing Finance, a Tata Capital subsidiary, is planning a big push into the home loan category as it seeks Rs 3,000 crore funding from the National Housing Bank and plans to raise Rs 1,000 crore via bonds to grow its business. The company will be offering loans to both retail and real estate developers.

The funds are being raised amid an expansion in its loan portfolio to Rs 33,201 crore, as on September-end this year, from Rs 29,311 crore on March 31. Retail housing loans comprised 55 per cent of total portfolio, loans against property stood at 27 per cent, while the rest consisted of loans to real estate developers.

A mail sent to Tata Capital Housing Finance did not elicit any response till the time of going to press.

“The affordable home loan market is booming in India and the Tatas want to increase their market share in the financial services business. Apart from the Tatas, the Aditya Birla group and Piramals are also keen to increase their share,” said one Tata Capital Housing Finance's lenders.

Tata Capital Housing Finance raised almost half its borrowings from banks, and the rest as loans from National Housing Bank (NHB) and preference shares issued to its parent company.

Lenders said as inflation remains high in India, tightening monetary policy measures by the Reserve Bank of India would dampen consumer sentiments for the next six months.

The big push from the home finance companies is coming at a time when they are losing market share to banks due to the latter's lower borrowing costs. During the past four years, housing finance companies have lost 400 basis points (4 per cent) market share to banks, resulting in banks’ share rising to 62 per cent as of March 2022, according to a report by rating firm Crisil.

Tata Sons directly owns 94.55 per cent stake in Tata Capital and most of the remaining stake is held by the other Tata group companies and trusts. TCL, in turn, holds 100 per cent stake in its two main subsidiaries--Tata Capital Financial Services and TCHFL.