Indiabulls Housing Finance has revised its growth target upwards by 1-3 percentage points to 23-28 per cent this fiscal following the government's move to demonetise old Rs 500 and Rs 1,000 bank notes, which is likely to spur demand in future.
"Loan growth guidance has been revised to 23-28 per cent for 2016-17, a rise of 1-3 per cent (from earlier target)," it said in a release.
This comes on the back of the Government's decision to demonetise high currency notes, which IBHFL believes will present huge positives to its existing business and future demand in the housing finance sector, it said.
"Of the USD 215 billion currency in circulation, 86 per cent is now demonetised. This cash economy will be replaced by formal channels of financial intermediation. An estimated 50 per cent of the demonetised currencies - USD 93 billion - was for essential needs of owning a house or for working capital requirements, which will now be met through lenders like IBHFL," the company said.
Measures will lead to easing of inflationary pressures due to lower consumption and demand, leading to interest rate cuts, it said.
This will be a huge boost to home ownership as well as increased margins for small businesses behind our lap product making it more robust and scalable, IBHFL said further.
Lower interest rates will lower the bank borrowing rates of IBHFL, linked to bank base rates which still constitute 39 per cent of IBHFL's borrowings, it said.
"Our spreads will increase by 10 to 25 basis points in the medium-term," it said.
On collections, the company said construction finance product, which constitutes 10 per cent of its loan assets, becomes more robust and secure as developers can't take cash from customers and all monies from home buyers would come directly through the banking channel to escrow account of IBHFL.
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