Report by India Independent Insight
Iii’s interactions with DSAs (Direct Selling Agents) raises alarms with regards to the company’s lending practices especially in the affordable housing segment. While affordable housing as a total book may be small, Iii anticipates pressure on NIMs and growth. Recent regulatory actions involving companies like Kotak, IIFL and Paytm have resulted in substantial declines in their respective stock prices.
Report by India Independent Insight
The Pradhan Mantri Awas Yojana (PMAY) has provided opportunities for low-income individuals to own homes in urban areas through the Credit Linked Subsidy Scheme. The scheme has benefited both home borrowers and real estate developers, as the government bears a substantial subsidy burden. The affordable housing market is thriving, especially in Tier 2 and Tier 3 locations, attracting a surge of finance companies. However, there are risks associated with above-average growth and credit decisions. Attrition rates are high and employee behaviour can impact loan disbursal. The market could be at a cyclical peak.
Companies covered include Aptus Value Housing, Aavas Financiers, Home First Finance, Capri Global, Mahindra Finance, AU Small Finance Bank, IIFL, Piramal Enterprises and Five-Star Business Finance.