Proposed to raise affordable housing limit in metros in Budget: Rishi Anand

Rishi Anand tells that the housing finance company aims to disburse Rs 8,500 crore in the financial year 2024-25

Amid the growing opportunities in the affordable housing segment, Rishi Anand, managing director (MD) and chief executive officer (CEO) of Aadhar Housing Finance, tells Harsh Kumar in New Delhi that the housing finance company aims to disburse Rs 8,500 crore in financial year 2024-25. Edited excerpts:

What is your target for FY25 in the affordable housing segment?

For FY25, we are aiming to disburse Rs 8,500 crore for the affordable housing segment compared to Rs 7,200 crore last financial year. To go deeper into the affordable segment, we are planning to enhance our reach in Rajasthan, Uttar Pradesh, Andhra Pradesh, Telangana and Maharashtra. When we say deeper, we are not referring to rural areas but rather small talukas and district headquarters where we are expanding our business. Currently, our total assets under management (AUM) is Rs 21,000 crore, with 71 per cent in the affordable segment.

Are you planning to enter corporate or developer financing?

No, we don’t have any exposure to the corporate or developer side. Our average ticket size is only Rs 10 lakh, and we are not looking at those sectors. We do not intend to enter the segment.

How is your co-lending progressing?

In co-lending, we consider two aspects — direct assignment and co-lending. In direct assignment, we transfer the same portfolio to the bank after six months. During these six months, we manage and nurture the customer portfolio before sharing it with the bank. Currently, we maintain around Rs 1,800 crore of our portfolio through direct assignment. Regarding co-lending, we have partnerships with two banks — UCO Bank and Punjab National Bank. Although it is still early for co-lending to gain significant traction, we are open to the concept. From a housing finance company's perspective, co-lending is a promising model that requires a collective effort to push forward. On our part, we are actively working on system integration to enhance our co-lending activities. We have already partnered with a software vendor for this purpose, and we are in the pilot stages of integrating the system. Once the integration is complete, we plan to actively scale up our co-lending operations.

What kind of budget expectations do you have for the housing finance sector?

We have made our budget recommendations to the finance ministry, requesting enhancements to income tax benefits and home loan interest rate rebates. The current benefit under Section 24(b) of the Income Tax Act allows Rs 2 lakh, which we believe should be enhanced to Rs 5 lakh. We have also requested a separate income tax section for principal payments on home loans, which are currently covered under Section 80C and seem to have already saturated. Providing a separate advantage to home loan seekers will encourage individuals on the fence to move towards home ownership.

Do you have any specific demands for affordable housing?

We are continually advocating for redefining affordable housing. We propose increasing the current finance limits from Rs 35 lakh in metros to Rs 50 lakh and from Rs 25 lakh to Rs 35 lakh in non-metros. This is given the significant rise in construction costs over the years. We also want the Pradhan Mantri Awas Yojana (PMAY) to be reintroduced with enhanced geographical coverage through all the four verticals — credit-linked subsidy scheme (CLSS), affordable housing in partnership, beneficiary-led construction, and In-situ slum development. These schemes, particularly CLSS, had created good momentum in homeownership. The government should consider enhancing the subsidy amount under CLSS to Rs 3 lakh. Additionally, we propose merging both PMAY Urban and PMAY Rural schemes for the CLSS subsidy and want to keep the subsidy amount the same. This is because construction costs have increased in all locations. We also advocate for the creation of affordable housing inventory under the public-private partnership (PPP) model. This will require significant support from both the central and state governments.