In two years, LIC homes hopes to quadruple the percentage of loans for affordable homes.

MUMBAI: According to a top official on Monday, LIC Housing Finance wants to more than quadruple the percentage of affordable housing loans in its loan book to 20–25 percent over the next two years.

Due to internal reorganization and management changes, the insurance giant’s home financing division saw a slower rate of loan growth in the December quarter, at 5%, as its chief executive and managing director, T Adhikari, who took over in August, informed reporters.

According to him, the corporation has not placed as much emphasis on financing for inexpensive homes as it has on the salaried and high credit score segments up to this point.

“At present, affordable real estate is 8-10 percent of the portfolio, and we plan to take it to 20-25 percent of the loanbook in two years,” said Adhikari.

Given the need for this kind of financing, he claimed the market offers generous growth prospects and better margins to financiers.

Adhikari highlighted that the government’s initiatives will also provide further support and that the PM Awas Yojana will assist create demand for affordable housing, which gives the company a “upbeat” feeling.

Although the real estate industry as a whole is doing well at the moment, Adhikari noted that lenders are engaged in a rate war when it comes to lending for real estate projects, with some lenders offering rates as low as 8.75 percent annually.

He continued by saying that LICHFL is wary of the sector and has a gross non-performing assets ratio of 34% on its project loan exposure. To slow down the increase in loans, Adhikari explained that the internal restructuring involved moving credit appraisal to 44 recently opened cluster offices and replacing a 13-year-old lending platform with a newer one that could handle digital onboarding.

He also acknowledged that management changes may have contributed to the growth slowdown, but he quickly clarified that moving forward, the company’s loan book will expand at regular rates.

According to Adhikari, the company plans to increase its loan book by more than 15% in FY25. The board will meet in March to discuss the strategy.

He stated that while LICHFL has benefited significantly in terms of liabilities, the HDFC twins’ merger has not had any particular impact on domestic financiers.