'Demand For Housing Loan To Improve': Hardayal Prasad, MD, CEO, PNB Housing Finance

What has been the impact of the coronavirus outbreak on the housing finance sector? Can you please explain using data on home loans availed/disbursed for a period before the pandemic versus after the pandemic to establish the overall trend in offtake, etc.?

The COVID-19 outbreak has led to business disruption and a temporary fall in mortgage demand as well as a higher focus on employee safety and security.

The first quarter of FY21 saw a decline in disbursement of about 70% in retail and around 90% in corporate portfolios. Our sales and collections were also impacted during the lockdown. Our collection efficiency (excluding the moratorium) increased to around 98% in July, from 96% in April 2020. In July 2020, we registered almost 70% business in comparison to BAU. We plan to ramp up business as we move ahead. 

How has the business changed due to COVID-19 and lockdown? What are the consumers saying (based on interaction and feedback)? 

While the shift to digital was already underway, the pandemic has accelerated the pace. There is a positive attitude among both the customers and service providers towards adopting digital technology. Given the many travel restrictions and other constraints, customers are looking forward to contactless and touchless options because they ensure zero or minimal risks and minimise visits to branches for loans.  

What are the challenges faced by you while dealing with lockdown? What has been the impact based on Monthly data beginning with April 2020 till date?  

While work from home is still prevalent in some industries across India, the housing sector is used to the touch-and-feel of lending offices. Thus, providing robust and seamless services while ensuring strict social distancing norms has been somewhat challenging. However, employees have been productive since the work-from-anywhere started with embracing of digital waking.  

Due to the initial anxiety of dealing with this unprecedented crisis, customers were desperate to ensure liquidity and opt for RBI’s moratorium, which ended on August 31. But after various initiatives to educate customers about the benefits of servicing loans every month and avoiding interest on the principal, we saw a drop in customers opting for the moratorium.  

There has been a pick-up in disbursements since June 2020. With all our branches operational, business has seen an increasing trend in logins, sanction numbers and disbursement values on a month-on-month basis 

What would be the demand scenario like for housing loans for the next 3 to 6 months, till March 31, 2021? 

The demand scenario for housing loans is likely to improve gradually in the months running up to March 31, 2021. We expect retail disbursements of Rs 13,000 crore in FY21. 

What led PNB Housing Finance to launch Ace? How similar or different is it from other such solutions offered by different HFCs? 

The changing times due to COVID-19 have prompted us to rethink our business strategy and launch new and innovative products, such as Ace, to improve contactless customer services. Ace is built on the core value of ‘customer centricity’ and is a digital onboarding platform that ensures easy and secure approval and disbursal of loans with minimum physical interface. The platform enables customers to apply for loans without visiting a branch. Ace will help us serve our customers better in a virtual ecosystem. 

What are some of the technologies that have made it possible to ensure a smooth consumer experience during this pandemic? 

While revisiting our IT roadmap, we reprioritized and accelerated our technology initiatives. We launched Ace, an innovative digital customer onboarding platform facilitating easier and safer approval and disbursal of loans with minimal physical interface. Ace lets customers log into the PNB Housing portal, fill the loan application form and upload the necessary KYC documents for online verification. This digital feature has enhanced customer satisfaction. 

How do you think NBFC s and HFCs can adapt to the new normal in the post-corona world? 

Since the time COVID-19 brought the entire nation to a standstill, the Government of India has been taking measures to address liquidity-related stress points and structural issues. Adjusting to this new normal by embracing digital for faster and more secure operations is the most important criteria. It is also essential to enhance data and risk analytics to drive greater volumes. Only a productivity and efficiency-led model will help the organisation succeed in the long run. 

How was your loan book for FY20? Please share your analysis for FY20 and correlate it with the housing market in FY2020? What’s your outlook for FY2021?  

We did not see much change in assets under management (AUM) in FY20 compared to FY19. In FY21, as already mentioned, we expect decent disbursements. We have been working to improve asset quality, spreads, NIM and collections, even as we strive to bring in efficiency in operations. We expect the business to improve gradually and will strive to achieve growth better than the industry. 

What are the various Red Flags you can foresee impacting the home finance market in today’s scenario?  

The layoffs, redundancies and closures across different sectors will have a cascading impact on lenders across categories. With long-term spends put on hold, demand in some housing finance segments may continue to face hurdles. Also, servicing existing loans may be challenging for customer who are laid off. PNB Housing will focus on recovery to ensure delinquencies and NPAs are within limits. The company has already built adequate provisions in its books. 

What can be the possible solutions to the challenges at your level, at the level of the regulatory environment, at the level of Government, etc.?  

We welcome the various regulatory measures introduced by the government and RBI over the past few months. The recent regulation on loan restructuring is a welcome step. But, as a housing finance company, we need clarity on the restructuring and have approached the regulator for the same.