HDFC’s Home Loan Disbursement May Rebound To 85-95% Of Normal By Q4 FY21: Keki Mistry

We're offering the moratorium to every single customer of ours and 79 percent of our borrowers said they do not need it. The number of non-individual borrowers who have opted for the moratorium is higher compared to the individual portfolio.

Given the lockdown, some developers are facing liquidity issues so we have to give them a moratorium. There are strong developers who have said with or without sales they have enough money from their own sources to pay their loans. All the large developers are able to service their loans, but smaller and mid-sized developers have asked for the moratorium.

We have not slowed down on our lending and we're looking for fresh lending opportunities. Disbursements obviously have slowed in this environment given that not all our offices are opened like in Mumbai and Madhya Pradesh. But even in those offices which are open, we are working at 33 percent capacity therefore, there will certainly be a slowdown in disbursements during the first quarter.

But our expectation is that the second quarter will be better than the first, the third better than the second and hopefully, by the fourth quarter this year we will be back to 85 to 95 percent of normal levels.

I have no doubt that growth and demand for home-loans in the medium term, because people need a house to stay and what Covid-19 has done is that it's pushing more people to work from home, which could mean bigger houses or separate study rooms and so on. Further, the joint-family could split into smaller units going forward which means more people will be buying their own house.

Over the last 20 to 25 years, if you monitor non-performing loans on a quarterly basis you find that there are certain choke points of stress in the economy, where NPLs (non-performing loans) tend to rise. But then once the stress goes away, people come back and make payments. So in the short-term NPLs could rise but in the medium-to-long term, I expect it to reduce.

We have continued to tweak the credit underwriting model as normal, given the situation today.

For the non-individual portfolio, it all depends on construction activity and the liquidity levels of developers. Ideally, at a time like this the Reserve Bank of India should give lenders the option of doing a one-time loan restructuring

In the affordable segment, our average loan to a customer is around Rs 17.7 lakh and most of these customers are salaried customers and not self-employed.

The risk today from job-losses or income cuts and its impact on NPLs is probably higher than in previous crisis periods, but we always see NPL levels reducing once normalcy is restored. We have to remember than a person is unlikely to default on a housing loan compared to a personal or consumer loan, because it's a real asset.

Further, there are also co-borrowers to a mortgage, so theoretically if one person loses a job or faces a salary cut they generally still do not default.

In a situation like this it is always good to be liquid and have lots of cash with you, because we see that many non-banks (NBFCs) are facing issues with raising liquidity. We will continue to look for opportunities to raise money even if it means in the short-term we have to hold that money with a negative carry. We have been slowly building up liquidity levels from around Rs 6,000 crore odd last year to as much as Rs 30,000 crore this year.

We have been sanctioned a Rs 750-crore loan from the National Housing Bank recently.