Affordable home loans will be a large biz opportunity: PNB Housing MD & CEO Girish Kousgi  

Punjab National Bank (PNB) Housing Finance expects to disburse loans worth Rs 1,000 crore for affordable housing by December, less than a year after foraying into the segment, as it sees a big opportunity in tapping homebuyers who do not have access to formal credit.  

The housing finance arm of Punjab National Bank entered the segment eight months ago with an average loan size of Rs 15 lakh. By September, its loan book size for this category grew to Rs 750 crore, according to MD and CEO Girish Kousgi.    

“Given the opportunity in India where a majority of people don’t have formal access to credit, we decided to get into it. In the last one year, we have opened 100 branches (for the affordable segment),” he said at a press briefing in Chennai to mark the opening of its 100th branch for affordable housing loans. It also happens to be the firm’s first all-woman branch in the country.    

These loans range from Rs 5-35 lakh for home buying, home expansion, renovation, plot purchases and loan against property. Without divulging the rate of interest, Kousgi said it will be competitive compared to what other players in the category offer currently.   

The affordable housing segment accounts for only about 30% of India’s estimated Rs 27-lakh-crore housing finance market currently. Kousgi is bullish about its potential to grow to 50% of the pie.   

Pointing out that companies usually take 3.5-5 years to reach the first Rs 1,000 crore loan book size in this category, he said they are confident of achieving the target within a year of starting due to robust demand. “It is very small compared to our total book size but the start has been good,” he said referring to the lender’s total loan book size of Rs 60,800 crore.  

He also sees their own product mix of prime and affordable housing loans changing over the next 4-5 years to 60:40. “Today, incrementally, affordable contributes to 9% as of H1FY24. By March 2024, it will have gone up to 12%. Next year, the contribution of affordable to overall incremental business will be 21%.”  

The firm plans to open another 60 branches disbursing affordable housing loans, with most of them coming up in tier 2-3 cities.

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