Piramal Group Forays Into Housing Finance Business

The real estate-to-healthcare group’s financial services arm floated a wholly owned subsidiary, Piramal Housing Finance Ltd., with an initial paid-up capital of Rs 1,000 crore, Chairman Ajay Piramal announced on Wednesday. It will initially focus on metros and then move to other parts of the country.

Thank you mr. parimal for joining us on bloomberg quint housing finance business you already have a successful real estate network real estate business why housing finance why not continue with the retail and construction financing as a business school so the housing finance is just a natural extension of what we are doing in the construction finance business and

Both are being it’s not that one at the expense of the other i think in some ways they will be actually complementary and one adding synergistic benefits to the other why did we enter housing financing i mean like many people i also had the feeling that housing finance is a very very competitive space there’s lots of people in it so what was going to be unique in

Us till we understood when we went in to another level of detail that housing finance today though it’s a big demand in our country there are only ten companies which are having assets or the book size of ten thousand crores and above and only 16 of them are five thousand crores and above and also if you go to another level of detail in these assets so these book

Size people also include lab they also include some construction finance so therefore though there is a need they’re not that many large players that was one thing second thing we also realized that developers whom we have actually a very close relationship we are today the second largest as far as book size in real estate financing is concerned if you look at

Equity plus loan plus what we have sanctions almost it’s 50,000 crores that’s they on the book so and we have close relationships with more than a hundred plus developers and a lot of developers were also telling us that we’ve done so much in the real estate space we ought to get into housing finance because housing finance is not a b2c business it’s a b2b see

Business and that’s the other thing that we realized third thing we realize is that the easiest way to enter into housing finances through salaried loans to salaried people but there is also an opportunity to get to the self-employed and our understanding of self-employed was pretty good there are the last four years we’ve been invested in shriram so we know how

To fund these people how to assess the risk how to get repayments and all also being a new player there’s been so much of progress in technology we could employ the latest technology which incumbents would find difficult and with technology comes the ease of doing business if you would say with customers with technology also comes more transparency trust you’ll be

Surprised that how many of us take housing loans and don’t see what’s in the you know hidden or what’s in the small print and actually the cost that we are paying is much more than what we think we’re paying and that’s where the whole pyramid brand and the fact that we have people have trust in us the fact that we will be transparent is another plus for that so

All this means we have strength so when you say you know these hidden costs in the home loan agreements are you trying to say that that’s something that you will specifically counter try and reduce or get rid of so we will not have those hidden costs so we will be you will pay what you see you will pay and there’s not going to be surprises which aren’t pleasant

Fair enough so you point out that there are only few people in the in the ten thousand grow five thousand grow bracket why is that is that a lack of will is that you know the business isn’t as simple as people thought it would be why do you think that is i think it’s yeah people have not did not think it’s or thought it was more simple than what it is so that

I think is the biggest reason i think there is enough of a demand but how do you end for people to establish with established names it’s not easy for smaller people to establish i think you need to have something unique that you can offer otherwise the well-known names are what people would go to sure in terms of financing what are some of the challenges in the

Housing finance space that you are seeing and how do you intend to cover for them how do you intend to counter them in housing finance obviously the challenges i in retail it’s a lot more detail i mean these are small knowns these are low people who will have a 20 lakh loan – or whatever several cross but it’s not going to be large so how is the detail the adding

The operational excellence is absolutely essential in that assessment of risk because we are not only talking about loans to salaried class people which is relatively easier but the self-employed so – how do you assess and the intention to pay i think these are the challenges and its really the detail and detail and detail that’s what makes a difference and it is

So how do we plan to meet these things one is as i said our understanding of the business is good that helps us the fact that we have technology which we will use fully the fact that we can use also data analytics that’s also what we are going to do and just keeping really i mean execution focus which we have done all throughout what about the delivery model at

This point in time how do you intend to get those customers how do you intend to give loans to them the delivery model we are beginning again with the b to b to c and therefore the first delivery model is to see that we are that the developers whom we have had a good relationship we get some preferential treatment or let’s say we are also there whenever they are doing

Their projects and because we’ve actually funded these projects right from the beginning the inception we know that project probably better than most so that’s one way we are getting feet on the ground so there are people we also have another unique thing in the dss we have a group of people who are working with us today in a wholesale financing called brick x these

Are brokers who do broking and sell apartments to individuals the reason why we had brick x is not because of the brokerage income as much as for getting real time real data these brick x people have relationships with several agents and dss almost ten thousand of them we will bring that to bear as well the advantage of this is that these are relationships with

The dss over many years and over many other products so therefore to that extent the stickiness of the loans will continue to close this interaction i just wanted to bring in you know something that has been in the news since this morning there’s been a major report that said some of the ids he-she remiel condos are being reworked now i know that you’ve answered

This question multiple times about why you know what is it and what is the status just want to understand again from you what is the purpose of the deal because i at the end of it do you think that the pace at which is moving you will achieve that purpose so the purpose of the deal is to see that how the shriram system in shriram we have lot of strengths we are

Uniquely positioned to give to small medium customers individual customers which nope and in areas which are not usually accessible by other finance companies so that is the strength how do we preserve this over peter time that was the strength and therefore can be institutionalized it can be institutionalize the risk mechanism the credit appraisals and all that

Going in the long term that was the reason for the deal with the idf see we are we are saying rebirth here the reworked in the sense just a framework announced we had never finalized it and even let me announce it in august we had said that to depend on what the rbi said it depends on valuation so we are there we are still working out we need to see that whatever

Construct we do which is in the best interest of shareholders or shriram group and the employees of shriram group that is my role and that’s what i will ensure you think you will be able to ensure it with in 1918 let’s see if it’s a delay and i mean this is a lifetime you don’t do these things often so if it’s delayed it’s not important ara mister promise thank

You so much for joining us on bloomberg mensa

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Piramal Group Forays Into Housing Finance Business By BQ Prime