Private sector mortgage lender Dewan Housing Finance (DWNH.BO: Quote, Profile, Research) will disburse more loans this year, boosted by newer regions and affordable housing projects, a top official said on Friday.
The company's current loan book stood at 61 billion rupees and it expects disbursements to rise over 50 percent each in the current and next financial year, Kapil Wadhawan, vice-chairman and managing director, told Reuters in an interview.
The company, which has a strong presence in southern and western India, has tied up with state-run Punjab and Sind Bank and United Bank of India for joint financing of home loans.
"As a focus, we see our growth coming up from tier 2 and tier 3 cities," he said, adding "outskirts of bigger cities are abuzz with affordable housing. That will drive our growth."
The company, which also distributes insurance, recently launched property consultancy services to market real estate projects in small towns and cities.
It expects fee-income of over 250 million rupees from insurance distribution and about 150 million rupees from property consultancy services to help maintain net interest margin at 3 percent in the current fiscal, Wadhawan said.
Strong recoveries will reduce net non-performing assets to 0.6 percent this fiscal, from 1.03 percent earlier, he added.
It also sees loan disbursals to overseas Indians from its London and Dubai offices to grow to up to 2 billion rupees this year from 1 billion rupees a year ago and is on the lookout for new markets.
"There is a brain drain of Indians coming back from those (overseas) markets," Wadhawan said. "Last year we saw a little slowdown, this year we are seeing a pick up again."
Softening property prices and interest rates were bringing back buyers, he added.
It plans to raise share of loans given to commercial projects to 20 percent of the revenue, from 10 percent now that will help fetch "higher yields".
The company, which raises funds via debt to meet loan growth, expects cost of funds in the next 4-6 months to fall 25-50 basis points with banks easing lending rates, he said.
Its benchmark lending rate currently stands at 15.25 percent currently.
The company's venture capital arm, DHFL Venture Capital Fund, also plans to float a second fund this year, to raise 2.5 billion rupees to invest in residential projects, he said.
"We wanted to raise money through the international route, but the market sentiment is not right, especially since this is a venture capital fund."
Dewan Housing holds 45 percent in the venture capital unit that had raised 1 billion rupees for residential projects in India's smaller towns and cities. The funds were fully-deployed.