A lot has happened in the past 25 years since LICHFL came into being. What is that one thing that has not changed in this period?
"We Indians like to save for the future without any responsibility," says Sharma.
A lot has happened in the past 25 years since LICHFL came into being. What is that one thing that has not changed in this period?
In the last 25 years, LICHFL has continued with its value-based culture. This is one organisation where every employee understands that giving value-based ethical service to a customer is more important than getting a customer. A housing project or unit appraised by LICHFL gets lending preference by banks or housing finance firms. The reason being that they are very sure of the kind of credit appraisal that we do, the kind of checks that we do on the property, the kind of due diligence we do on the property and the person. This entire process gives a lot of confidence not only to a homebuyer, but also to a lending organisation. These values are very nicely entrenched in LICHFL’s fabric.
Home loan, as a product, is fairly structured. For a homebuyer, there is very little to pick among lenders. In such a situation, what is your USP?
Indians don’t like the loan burden much Sunita Sharma, MD & CEO, LIC Housing Finance (LICHFL), in this interview to Pankaj Anup Toppo, explains the firm’s 25-year-old USP and its customer-centric focus One of our qualities is the credit appraisal that we do. We have something known as “feet on street.” We have intermediaries who give doorstep service. This means they go to the customer and provide our services to the customer at their doorsteps. Apart from providing service, these intermediaries also guide the customer as to what is best for him. Some of these include helping the person get an idea of how much of loan he/she is eligible for or what kind of property they should be looking at, and so on. This, to a great extent, gives lot of confidence to the homebuyer and creates a trust between him and the company.
With the prepayment penalty on floating rate home loans removed, are you seeing any reduction in the average time taken by home loan customers to repay the loan?
People pay off their home loans much before the original loan tenure and that is more to do with the Indian psyche. People do not want to keep too much of loan on themselves. Whenever there is any form of surplus available, they typically use it to repay the loan first. They don’t keep interest payments going on. Interest is something which Indians don’t want to bear. The waiver of pre-payment penalty will not change this habit. At LICHFL, we give loans for a period of as long as 30 years. And the average currency of loans is around is 8-10 years. We don’t see this coming down in the near future.
With the list of the 100 cities earmarked under the smart city project yet to come out, what is your sense LICHFL’s role will be like in these cities?
It will be a great opportunity for us. It will be great for all the housing finance companies and other players in this space. Since these will be smart cities, there will be a lot many companies from the IT-ITeS services. That will lead to a lot of employment generation as well as create a need for housing. Naturally, developers will move into such locations. Once that happens, we would not only want to fund the house purchase of homebuyers, but would also like to fund the developers.
What steps have you taken to ensure quality of service for borrowers?
We have always been focused on customers. On 19 June, 2014, we launched the electronic customer relationship management (ECRM) system. Through this, all the services that we offer to our customers have been made digital. Through this module, we are able to service all requests and complaints from customers. In the past 3-4 months, we have tried to meet the service requests of the customers within a day. When a complaint is received, and, if it is not serviced within a day, then it is escalated to the regional office. If things don’t work out by the fourth day of the complaint, it is escalated to the corporate office. And at the corporate office, we personally monitor such complaints. There are no pending complaints as of now.
What about the quality and quantity of loans? How comparable is it to your peers?
I would like to say that on 28 November, 2014, we completed `1 lakh crore in our loan books. That itself is a very big achievement. And we are very happy that it happened in the silver jubilee year of LICHFL. At present, we are growing 20 per cent year-on-year with regards to disbursements. We have always targeted a steady growth. We are continuing with that. If we grow more than 20 per cent, then our portfolio, too, will grow, and that will give us a lot of satisfaction.
Realty experts say that after a stable government took over, there was a revival in the sentiment. But deals are not happening. Your view on this?
Yes, I agree. If you look at LICHFL figures from April and May 2014, you will feel uncomfortable. But in the month of June, figures shot up, and by then, the new government had not taken any policy measures. Stability at the Centre gave a lot of confidence to the people. Deals are happening. If you look at our figures, the growth rate in June was more than 20 per cent, and for the month of September, disbursals grew as high as 39 per cent. Now, too, it is going at more than 20 per cent. It means that deals are happening. The deals are happening in the end-user segment. Investors are not getting into deals now. They are waiting. If you look at the stock market, they have been doing well for a while now. It has generally been that the boom in the market is typically followed by a lag in the property market. The boom in the property market will happen.
What is LICHFL’s percentage of retail loans to developer loans?
Our retail loans are 97 per cent of our total portfolio. Developer loans are slightly less than 3 per cent.
How has the cost of borrowing impacted your margins?
It impacts us positively. But on the whole portfolio, the liability book that we have, whatever incremental is there, we are going at 8.5-8.6 per cent. It will affect the liability book. And if that happens, it will reduce our cost of borrowing, which is good for margins.