The retail loan book has grown 16 per cent year-on-year. Which segments have driven this growth?
Retail has done well, mainly housing. Among segments, emerging markets have performed better than education loans. Emerging segment growth is around 25 per cent, followed by prime at about 20 per cent.
Is net interest margin (NIM) a challenge for housing finance companies after continuing rate cuts? Has the cost of borrowing come down? Have you explored other funding sources?
There has been some challenge, but overall we are still maintaining NIM at around 3.63 per cent, close to our guidance of 3.7 per cent. The moderation is primarily due to rate cuts. Moreover, our borrowing composition has not changed much. However, we have negotiated with banks. New borrowings are linked to marginal cost of funds-based lending rate (MCLR). When rate cuts happen, MCLR transmission takes time. It is not immediate. Some borrowings are on fixed rates, which do not benefit from rate cuts. Churning fixed-rate borrowings takes time because of commitment costs. Despite these constraints, we maintained NIMs at 3.63 per cent by improving our emerging business and loan against property portfolio.
Do you expect NIM to decline further?
In Q4 FY26, or improve? It should remain in a similar range — around 3.6 per cent to 3.7 per cent. There may be some difference. That is why we are focusing more on emerging markets and plan to start construction demand finance, which will help sustain margins over time.
On asset quality, your gross non-performing assets (GNPA) have reduced by around 10 basis points. What is your outlook for next year?
We expect GNPA to remain in the range of 1 per cent to 1.04 per cent. We are already well placed and expect asset quality to remain stable.
What is the progress on plans to restart corporate lending with a digital platform?
There has been good progress. The data is in place and the N-tia is also in place. We have started the process, but corporate lending takes time due to approvals from various authorities and project construction timelines. We may see some disbursements this quarter with momentum building from Q1 FY27.
With the Union Budget around the corner, what are your expectations from the government for the housing finance sector?
The government should relook interest subsidy benefits. Housing has strong linkages with industries like steel, cement, infrastructure, and paints. Higher interest rebates or interest subsidies for homebuyers would boost overall sentiment and demand.
There is a long-standing demand to redefine “affordable housing”. Any suggestions to the government?
There is no single definition of affordable housing. While priority sector lending norms are defined, affordability itself varies. Affordable housing depends on collateral quality, customer profile, income strata, and loan pricing. Standard norms are yet to be clearly defined, which creates ambiguity.
What is the status of co-lending? Any new tie-ups?
More than tie-ups, there is a need for standard norms between partners. Dual underwriting often creates mismatches, as each institution follows its own credit philosophy. If underwriting standards are aligned and simplified, co-lending can succeed. Otherwise, execution remains a challenge. Industry-wide, co-lending portfolios are still limited.
Do you currently have any co-lending exposure?
No, we do not have any co-lending exposure as of now. If processes align in future, it could be considered.
 "Ajai Kumar Shukla, Managing Director & Chief Executive Officer, PNB Housing Finance")