Limited loan growth gains for smaller home finance companies

HFCs give smaller-sized loans largely to the self-employed borrowers where banks' presence is low

Year 2017 has started on a good note for affordable housing finance companies (HFCs) such as Gruh Finance (Gruh), Repco Home Finance (Repco), Can Fin Homes (Canfin), among others. First, a slew of lending rate cuts from banks will benefit these companies more than their larger peers. This is because the larger HFCs operate in segments wherein they compete directly with banks and, hence, have limited pricing power. 

The affordable HFCs, on the other hand, give smaller-sized loans largely to the self-employed borrowers where banks have a lower presence. Also, unlike these HFCs, which have high dependence on bank borrowings,