While most non-banks have burnt their fingers with such loans in the past, they are focusing on low yielding developer advances to reputed builders as the preferred route to expand the wholesale book.
“We are consolidating our development finance book, but we still like the business; it is materially a sound business,” said Jairam Sridharan, managing director, Piramal Capital and Housing Finance. “The fact that banks have got serious limitations in terms of how to lend to real estate is well known. So, where will the funding come from? We want to be among those providers.”
Piramal Capital and Housing Finance bought over Dewan Housing Finance Corporation (DHFL) in September 2021 for a total consideration of ₹34,250 crore. DHFL had a developer loan portfolio of more than ₹ 50,000 crore. The company has managed to shed the bulk of those loans.
At the end of September 2022, assets under management (AUM) climbed 35% to ₹63,780 crore, as the retail business expanded 12% and the wholesale business shrank 13%.
“We like the real estate sector and we want to be part of it but we will incorporate some of the learnings from the previous cycle and make sure that those are fully incorporated in our new strategy,” Sridharan added.
The non-bank lender is aiming to build a portfolio where retail is 2/3rd of the book and wholesale remains 1/3rd. At the end of this fiscal year, the company has plans to get close to 50% retail assets.
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