Torbit Interactive: Housing Finance - Road Ahead

Sunir Ramchandani

COO, Tata Capital Housing Finance

When I look at the financials of the developers in 2020 vs 2025, I find them far stronger and more disciplined now. There are some exuberant partners/developers. But we engage them in conversation and tone down their exuberance. Coming to the lending, they are far more reliant on data. There's a lot more data available with us as well – some direct and some through integration with some other data providers. This is helping us make informed decisions quickly. Everything has changed around us for the better.

From the RBI perspective, regulation has been made more stringent and there’s a move about harmonising regulation between banks, housing finance companies and NBFCs. Land which was earlier non-financiable is today financed by HFCs and NBFCs if it comes with approvals, though there's still a time gap between land acquisition and lending. Today, there is not one source of lending – there are multiple sources, including banks, the capital market, bonds, mutual funds, and private capital.

Sandeep Arora

Group Head Mortgages, ICICI Bank

Today, we are far more organised. If we talk about data availability for customers, we can make a much better and faster decision. Speed is a key thing that we have gained. Secondly, the earlier norms have become far clearer today, as we can now look through the developer and customer ecosystem. It has not remained episodic; it has become a continuum story where we can underwrite the customer better.

Earlier, the philosophy was that once the customer bought a home, the story ended till he bought the next home. But that's not the story anymore. The banking system is revolutionising the entire journey. We are able to disburse faster. That's possible now through collaboration and deployment of technology. Can we join hands to become less episodic and more continuum? Looking at the current transformation, the future will be even better.

Customers are now planning for much bigger and better homes. Earlier the home office was limited to only self-employed people, but today in a hybrid culture, even employed persons are working both from their home and office. The world has changed and become better. The way developers have transformed is amazing.

Sunir Ramchandani

With regard to construction finance and land finance, financial closure is happening piecemeal. We will have to develop models. We are working with certain developers to make sure that we do full financial closure on day one. This is happening in commercial property. So, why should it not happen in residential real estate? What we need today is how we get upfront approvals. Today the entire capital stack has changed. The residential capital stack has debt, equity, and mutual funds.

There are structures allowing financial closure from day one. The regulator is not stopping HFCs and NBFCs from funding. If you are doing a project, the regulator is extremely supportive of the capital stack. But if you are speculating, then the regulator literally prohibits every single financing for land. In that case, the option is to tap alternate sources of funding. The capital is available for both big developers doing a large number of big-ticket transactions and small developers doing a low volume of small-ticket transactions. At Tata Capital Housing Finance, we actually have two separate teams – one for regular established developers and another dedicated team for emerging developers selling less than 2000 units in a year, doing 3-4 projects in specific micro-markets. So, it is a misnomer that capital is available for only top developers. They come to light because they consume large amounts of capital.

Sandeep Arora

At Axis Bank, we have started looking at full-spectrum lending – from INR 5 lakh to INR 150 crore. We have one dedicated team for affordable housing – for customers who may not have documentation to establish their income. But then a lot of secondary information is available for that. And as a bank, we are consuming a lot of secondary information based on the customer profile. It makes things easier for us. We are also making use of technology and AI to deliver faster. Today, we have a risk appetite for funding the informal sector.

Sunir Ramchandani

RBI, through new guidelines issued on October 1, is trying to ensure that money goes into development and not into speculation. They are trying to harmonise lending across the stack and improve the level of compliance. Emerging developers in micro-markets have an extremely good compliance track record. The regulator is trying to ensure that delivery happens as per the committed timeline. I see a continuous flow of capital. Tech & AI will ensure information is on the fly and bring a difference in customer experience. In the future, the customer's experience is going to decide what he needs.

Sandeep Arora

Now, there is more understanding of the customer profile. As such, we are able to price risk better and fund more. Still, if we look at the lending in terms of GDP percentage, it is the lowest at 11% and hoping to touch 15%. On the other hand, developed countries are at 50% plus. China is topping 30%. Considering this, a phenomenal opportunity lies ahead for us in housing finance.

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