Is Indian Mortgage Industry
in Safe Hands?
The Indian mortgage industry is observing a shift in the profile of individuals filling the leadership roles. One would recall that the first set of captains who dared to create a segment within the BFSI sector are the true innovators. In fact, it is an industry by itself considering the size of the market.
Have the batons passed on to safe hands?
The answer seems to be categorical affirmation. It is important to see a pattern in the profile of the new captains of the mortgage finance industry. It is pleasing to observe the CEOs of batch of 2017-18 and founder MDs of the new generation housing finance companies are young professionals who have moved from the rank and file of the organization that they have served. It starts with the CEO of NHB, having worked at different levels in the retail banking industry. If we look at PNB housing, DHFL, Reliance Homes, India Bulls, Shubham, ART, India Shelter, Vastu, Nivara Housing, KIFS, Manappuram Housing, Muthoot, AU housing finance, a common thing that emerges is they all of them have worked at the grass root level. They understand the marketplace. Probably they know what has worked and what has not worked? Also, on the same breath, they also would have added to their DNA, the risk components of the business.
At the same time, we see a number of new housing finance companies emerging which is trying to identify the reasons for their inability to scale-up. What could be the reason? One of the common reasons stated is the ability to raise low cost of funds.
However, for a housing finance there are only two major factors for operating at an optimum level. One is the cost of funds and other is systems and process that has been put in place. It is important to look at systems and process that is being put in place as it decides the other in the long run.
While technology places a big role to get the systems and process in place, the biggest impediment is people. The future success of HFCs is going to be dependent on skilling its people for the challenges that the industry is going to face.