Arup Dasgupta, Regional Manager-East, LICHFL
Demand for housing in Odisha is passing through a sluggish phase as buyers are still on a wait and watch mode to invest, says Arup Dasgupta, Regional Manager (Eastern Region), LIC Housing Finance Ltd [LICHFL]. Buyers are still on a wait and watch mode to invest, especially in the premium housing segment. He shared his views to gharabari.com in tete-a-tete with Sandeep Pattnaik candidly. Excerpts.
You are a pioneer in housing finance market. How do you see Odisha as a place for home loan buyers?
As on date, the market is sluggish in Odisha in general and Bhubaneswar in particular. Now the market looks like “unfriendly” to the investors. The buyers are alert and choosing the property very cautiously.
What is your view about the property prices in the Capital city Bhubaneswar itself? Any expectation of prices softening down in the future?
There are units available for sale in and around Bhubaneswar, with a price ranging between Rs 20 to Rs 70 lacs per unit. While the rates are project and amenities centric, the market may be good for the unit costing up to Rs 35 lacs. Builders are sitting on the inventory generally costing above Rs 50 lacs category. In this higher end segment, builders are not reducing the prices of houses even as, there are not enough takers in the premium category.
How far is the appetite for the home buyers in Odisha towards luxury segment residential houses? In which housing segment LIC HF has the dominance in the state?
There is always a definite edge for the individual houses when compared to the apartments. The potential is very good in simplex and duplex buildings funding. However, we are evenly placed and our exposure to both apartments and individual houses is more or less equal.
Do you think, the present cost of credit is conducive to do attract prospective home loan customers to augment your biz volume?
Our present offer rate of interest for new customers (special offer) stands @10.10% (fixed for first 2 years from the date of sanction of loan and then floating at the applicable rate) is the most competitive one in the market and very helpful to do more new business.
What is your organization’s take on the prime lending rate [PLR] front? What is the existing rate and how it is going to be tweaked in the future to be competitive?
Our present LHPLR is 14.5 % and existing old customers are offered 250 bps (basis points) less i.e. @12%. The rest is in the purview of our Corporate office.
How the recent RBI credit policy has affected the segment?
The competent authority to answer is our corporate office located at Mumbai.
What is in the General Budget 2014 to further drive the real estate sector?
Tax exemption limit for the interest paid on loans availed in respect of self occupied properties increased from Rs 1.50 lacs to Rs 2 lacs. This will have a positive impact and encourage people to avail higher loans for purchase of residential properties.
With mining ban in the state and the economy not yet recovered out of woods, how do you see it affects the housing finance sector?
Ban on mining activities has led to fund flow dried which in turn minimize investment in new projects. Buyers are in a wait and watch mood due to which many housing units in majority of the medium and big projects are remaining unsold in the state. This is an indication that the supply of housing stock in Bhubaneswar is more than demand at present. It has also cascading effect on the housing finance biz.
What is LICHFL’s outstanding loan portfolio in the state till 1st quarter of current FY 2014-15 in the state? What is the scenario in capital city Bhubaneswar?
Gross outstanding loan portfolio of LICHFL for the first quarter ended June’2014 is Rs 720 crores out of which Bhubaneswar itself accounts for Rs 407 crores.
Please comment on the NPA status out of the total loan disbursed?
Our non-performing asset (NPA) stands at 0.61% at present that is well within the RBI specified norms of maximum 1%.
What is your counter strategy to compete with the private players running the show in the home loan biz?
Shortage of housing stock is huge in the Country when compared to the demand as a whole. There lies an opportunity to the players, notwithstanding the bearish economy. Thus, the competition is intense. Still our (LICHFL) strengths are (i) brand image of the company (ii) competent interest rates and transparent practices (iii) hassle free loan processes and transactions (iv) wide range of home loan products (v) large network of 270 area offices across the Country with five in Odisha (vi) huge network of marketing intermediaries… all these enable us to have an edge over others in the home loan biz.