Girish Kousgi, MD & CEO, PNB Housing Finance and Kalpesh Dave, CEO, Star Housing Finance reveal achievements in growth, expansion, funding, digitization and talent:
Smriti Pandey: Briefly describe the changes in your loan portfolio over the last 12 months in terms of total number of customers, loan book, monthly disbursements (value and number), average tenure, etc.
Girish Kousgi: Over the last 12 months, we have witnessed substantial growth in our loan portfolio, driven by a strategic focus on the retail segment, particularly in affordable housing and emerging markets. As of September 30, 2024, our retail loans asset portfolio has expanded to Rs679.70 billion, reflecting a strong 16.2% yoy growth.
Notably, our prime segment reached Rs524.67 bn, while the affordable housing and emerging markets businesses grew by an impressive 297.1% yoy and 21.6% respectively. These high-yielding segments now contribute to 31% of the total retail disbursements, underscoring our commitment to catering to underserved areas. The average ticket size for individual housing loans stands at Rs2.9 million, while for retail non-housing loans, it is Rs2.77 million.
Looking ahead, we will continue to prioritise high-yielding segments, including affordable housing and emerging markets – leveraging our pan India branch network and digital initiatives to better serve our customers and achieve sustainable growth.
Kalpesh Dave: Over the past 12 months, Star HFL has demonstrated impressive growth in its loan portfolio. The Assets Under Management (AUM) have surged from Rs3.19 billion in September 2023 to Rs5.18 billion as of September 2024, marking a robust 62% yoy increase. This milestone underscores the effectiveness of Star HFL’s strategic focus on affordable housing finance, particularly targeting the Economically Weaker Sections (EWS) and Low-Income Groups (LIG).
The number of active accounts increased from 4340 to over 5117, reflecting the growing trust and adoption of the company’s services. Monthly disbursements have stabilized at an average of Rs200 million, supported by strong demand in urban and semi-urban markets. The incremental loan sizes reflect Star HFL’s alignment with diverse customer needs, averaging Rs12-13 lakh in urban areas and Rs6-8 lakhs in rural regions.
The average loan tenure primarily falls in the 10-15 year range, with a significant portion within the 61-120 month category. This structure ensures flexibility for borrowers while maintaining manageable risk levels.
Star HFL’s performance is bolstered by a focus on serving first-time homebuyers, providing over 6000 customers with the opportunity to own a home. These achievements are complemented by a prudent risk management strategy, with GNPA and NNPA levels consistently maintained at 1.56% and 1.09%, respectively, as of September 2024.
With its customer-centric approach and strong growth trajectory, Star HFL continues to make a meaningful impact in the affordable housing finance sector, empowering underserved communities and fostering sustainable development.
How many branches has the company added in the last 12 months? In which regions? What is the brand expansion plan for next 12 months?
Girish: We have a robust distribution footprint of 303 branches and outreaches across India, along with a wide network of over 14,000 channel partners, enabling us to serve customers across 20 states. In the last quarter of FY24 alone, we added 100 new branches across market segments, making significant strides in expanding our footprint and accessibility.
Our expansion strategy is aligned with our vision to serve underserved regions, focusing on North, West, South and Central India, where demand for affordable housing is high. The new branches cater primarily to affordable and emerging segments, providing customized financial solutions to meet local needs.
Looking ahead, our plan for the next 12 months is ambitious and strategic. We aim to widen our footprint to 500 branches by FY27, further strengthening our presence in key growth markets. Our objective is to make home financing more accessible to millions of individuals across India, thereby delivering value to our customers and contributing to the overall growth of the housing finance sector.
Kalpesh: Star HFL has strategically expanded its physical footprint over the last 12 months, adding multiple branches and extending its network to over 36 Points of Presence across 6 key states – Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, Tamil Nadu, and the National Capital Region (NCR). This expansion reflects the company’s commitment to serving regions where affordable housing demand is growing.
Several branches were established in tier 2 & 3 cities, which align with Star HFL’s mission of addressing underserved housing finance needs.
Looking forward, the company’s expansion strategy involves a mix of organic growth and strategic tie-ups, with a focus on strengthening its presence in high-growth regions. Over the next 12 months, Star HFL plans to add new branches, particularly in southern and western India, where urbanization trends and government incentives for affordable housing are fostering demand.
In addition to geographical expansion, Star HFL is investing in creating a strong brand presence through local partnerships and community outreach programs.
These efforts aim to deepen trust and awareness among prospective borrowers in its target segments.
Through this well-planned branch network growth, Star HFL is not only scaling its operations but also reinforcing its position as a leading provider of affordable housing finance solutions in India.
What amount of debt has the company raised in the last 12 months? From which sources? What is the company’s credit rating?
Girish: We have successfully raised substantial debt to fuel our growth and diversify our funding mix. Our total borrowings amounted to Rs570.28 bn as on 30th September 2024, of which term loans formed 39.1%, deposits accounted for 31%, while NCDs and CPs constituted 9.9% and 9.5% each. We also received an external commercial borrowing sanction of $125 million in the quarter.
During the financial year ended 31st March 2024, we secured a refinance of Rs30 bn from the National Housing Bank (NHB) at a lower cost, helping us optimise our borrowing expenses. We also raised Rs14.51 bn through Non-Convertible Debentures (NCDs) and Rs101 bn through commercial papers (CPs), tapping into long-term funding at competitive rates.
Our successful rights issue of Rs24.94 bn in May 2023 provided essential growth capital, boosting our Capital Risk Adequacy Ratio (CRAR) and supporting our ongoing efforts to reduce the overall cost of borrowing. This diversified funding approach positions us well for sustained growth and increased financial stability in the years ahead.
Our strengthened credit rating, which was upgraded to AA+ by CRISIL, ICRA, CARE and Ind-Ra, played a pivotal role in expanding our access to debt markets. The improved rating reflects our enhanced asset quality and robust financial health, enabling us to attract a wider range of debt market participants. It has also helped reduce the average borrowing cost by 8 bps sequentially and 19 bps on a yearly basis.
Kalpesh: Over the past year, Star HFL has successfully raised debt to fuel its growth and operational objectives. As of September 2024, the company’s outstanding liabilities stand at Rs3.75 bn, up from Rs2.24 bn a year ago, reflecting a significant increase in lender confidence. Notably, this includes a sanction of Rs500 million from a single lender, the highest-ever single sanction in the company’s history.
The borrowing profile has been thoughtfully diversified, drawing from multiple funding sources such as public and private sector banks, financial institutions, and the National Housing Bank (NHB). This diversified approach has not only reduced dependency on any single source but has also provided stability to Star HFL’s funding pipeline, enabling it to support the growing demand for affordable housing finance.
In addition to expanding its funding sources, Star HFL’s credit rating as BBB/Stable, affirmed by CARE & India Ratings, has strengthened its credibility in the market. This rating reflects the company’s robust financial health, sound governance practices, and consistent performance in maintaining asset quality and profitability.
The capital raised has been deployed to scale up lending operations, enhance co-lending opportunities, and maintain a healthy liquidity position. These initiatives align with Star HFL’s strategy to serve more customers in the EWS and LIG segments, further cementing its position as a trusted partner in the affordable housing ecosystem
Briefly describe the top 3 digital projects undertaken by the company in the last 12 months in terms of outcome and underlying technologies. What is the size of the IT team?
Girish: At PNB Housing Finance, creating a seamless customer experience across origination, onboarding, disbursement and post-disbursement services is critical for our success. Over the past 12 months, we have embarked on several digital transformation projects aimed at enhancing operational efficiency, customer experience, and overall business performance. Some of the key initiatives include:
Salesforce integration with CRM: We fully integrated Salesforce into our CRM platform to streamline the sales process and improve lead management. This platform facilitates end-to-end sales enablement, offering a unified view of customer interactions and automating workflows.
Introduced RO Mobile App: We also introduced a mobile app for our sales agents, enabling real time lead notifications, better lead tracking, appointment reminders, geo tagging, online customer acquisition, instant lead status update which directly flows into the CRM on real time basis etc. As a result, we have seen improved conversion rates and faster loan processing times, significantly boosting customer satisfaction.
‘One PNBHF’ digital platform: To enhance collaboration and operational efficiency, we launched the ‘One PNBHF’ platform, consolidating technology, operations, and analytics under a single ecosystem. This shared platform enables seamless data flow and integrated processes, leading to faster decision-making and a more personalised customer experience. It also allows us to leverage synergies with fintech partners and market aggregators, positioning us as a leading digital player in the HFC space.
API journey and cloud transformation: We are strengthening our core technology foundation by leveraging cloud workloads and amplification of micro capabilities and services for seamless digital integrations. The implementation of cloud-based workloads (SaaS, PaaS, and IaaS) has optimised our infrastructure, ensuring scalability and resilience. This shift has improved our agility, reduced downtime, and enabled 24×7 monitoring with AI/ML-based security, further enhancing our overall tech resilience.
Our IT team, comprising over 70 skilled professionals, continues to drive these initiatives forward, focusing on leveraging technology to deliver a frictionless customer experience at scale.
Kalpesh: Star HFL’s co-lending business has grown significantly over the past year, reflecting its commitment to expanding access to affordable housing finance. Through strategic partnerships with leading financial institutions, the company has leveraged its reach and operational expertise to offer loans to underserved segments, while co-lending partners provide capital.
New co-lending partnerships forged in the last 12 months include collaborations with Tata Capital, Home Capital and Singularity. These partnerships have allowed Star HFL to serve a broader customer base, particularly in tier 2 & 3 cities.
These collaborations have not only enhanced Star HFL’s ability to scale but have also provided its customers with access to competitive interest rates and flexible loan terms.
Co-lending has also helped Star HFL manage its portfolio effectively by sharing risk with its partners. The company’s focus on digital integration in co-lending processes, such as real-time loan approvals and automated workflows, has further improved operational efficiency and customer experience.
By continuing to nurture and expand its co-lending ecosystem, Star HFL is well-positioned to achieve sustainable growth while fulfilling its mission of enabling home ownership for first-time buyers in the EWS and LIG segments.
How many total employees as of now? Briefly describe the change in number of employees over the last 12 months. Which are the top 3 functions that have seen the most hiring? In what parts of the hiring and on boarding process is AI being use?
Girish: As on 31st March 2024, our company had 2,000+ employees reflecting a robust growth trajectory in our human capital. During FY24, we on-boarded 886 new hires, marking a significant expansion to support our business growth and operational excellence. As we aim to achieve better growth and profitability, we are adding qualified team members across multiple verticals like affordable, emerging, cross-sell, etc. Our HR strategy, based on our foundational values of meritocracy, equality, inclusivity and non-discrimination, has helped in developing an engaging and enterprising workplace culture.
We have integrated AI-driven tools into various stages of our hiring and onboarding processes to streamline operations and enhance the candidate experience. AI is extensively used in resume screening, enabling efficient filtering based on skills and experience. Additionally, AI-powered chatbots assist with candidate queries and interview scheduling, improving response times. During onboarding, AI-based learning modules guide new joiners, facilitating a smooth transition into the organisation.
Our people practices like Aikyam, Prarambh, Sampark, etc, help us build an engaging workplace, strengthen diversity, and foster collaboration, thereby helping us earn the coveted ‘Great Place to Work’ certification for 3 years.
Kalpesh: Star HFL has seen an increase in its workforce over the last 12 months, growing from approximately 250 employees to over 300 as of September 2024. This growth reflects the company’s expanding operations and its focus on building a robust team to meet its strategic goals.
The top 3 functions that experienced the most hiring include sales, credit and collections. This hiring trend aligns with the company’s emphasis on scaling its business and maintaining strong portfolio quality. Sales professionals have been added to strengthen the outreach in existing and new markets, while credit risk and collections teams have grown to ensure high-quality underwriting and efficient portfolio management.
The company’s employee growth is complemented by a strong focus on training and development, ensuring that new hires are well-equipped to contribute effectively. This people-centric approach has enabled Star HFL to build a team of housing finance professionals dedicated to driving its mission of empowering underserved communities.
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