Godrej Housing Finance Considers Co-Lending Partnerships in Affordable Housing

Godrej Housing Finance plans to enter into co-lending partnerships as part of its proposed foray into the affordable housing finance space, said Manish Shah, Managing Director and CEO of Godrej Capital.

The housing finance arm of Godrej Capital has also launched two small affordable housing pilot projects in Mumbai and Pune, Shah said. Activity area.

Later this year, Godrej Capital will also launch cash flow-based unsecured loans through its other subsidiary, Godrej Finance, he added.

Asked about the break-even point, Shah said Godrej Capital will seek to break even in this second full year of operation.

Godrej Housing Finance and Godrej Finance are two operational entities merging into Godrej Capital, which is the holding company. Godrej Housing Finance started operations in November 2020.

On whether Godrej Housing Finance plans to evolve as a player in affordable housing finance, Shah said: “We are very aware that as a market participant, affordable housing is a good opportunity and a significant opportunity too. It’s not just a financial opportunity, it’s also a need of the hour. The more we looked at affordable housing, the more we realized that we needed to understand it better. There are players who understand it much better than us. We therefore work in partnership on a co-loan basis and, on the other hand, we examine our own pilot projects. This is a class trip for us in this space and we are in the learning phase,” Shah added.

Godrej Capital, which currently has assets under management of ₹2,500 crore, wants to franchise retail assets across the country. Godrej Industries, which is a listed entity, injected ₹1,500 crore into Godrej Capital.

Godrej Housing Finance started operations in five cities – Mumbai, Delhi, Bengaluru, Ahmedabad and Pune and is now expanding to six more cities – Chennai, Hyderabad, Indore, Chandigarh, Surat and Jaipur. “We will be in 11 cities next quarter,” Shah said.

Going forward, the company will use the presence in these 11 cities to expand its base in the respective states.

From a product basket perspective, these are prime housing and lending versus real estate segments.

₹30,000 crore AUM

By April 2026, Godrej Capital is aiming for a balance sheet of ₹30,000 crore.

“Our first target is to reach ₹6,000 crore by FY23; reach ₹10,000 crore by the end of next fiscal year and ₹30,000 crore by FY26,” Shah said.

He further said that the Godrej Group will leverage its long-standing relationships with banks to avail term loans from banks to meet the debt needs of the business.

“As we speak today, we would have 2X of our current assets under management in the form of committed lines of credit with banks. There are enough debt avenues for our financial services business given that the other Group companies are not big borrowers,” Shah said, adding that Godrej Capital would rely on innovations in product design (design your EMI) and product delivery to differentiate itself from other players.

Interest rate tightening

Regarding the interest rate hike, Shah said: “The interest rate hike is here to stay. We don’t see demand falling as rates rise. I am encouraged that this will not reduce demand. In fact, we are seeing strong consumer demand,” Shah said.

Shah pointed out that the affordability of houses in India had been the best in the past two decades. “The overwhelming majority of our customers were buying to live in,” he added.

Published on

June 26, 2022