Expect good times within two quarters, says PNBHFL’s Sanjaya Gupta
Why was the reason behind launching the branch in Fort?
Our nearest branch—Prabhadevi—is a full-fledged branch. So, we wanted a branch in Fort area that focussed only on deposits. So we opened it here.
What is the target in terms of deposits from this branch?
On the first day, the team is mobilising around Rs 7-10 crore from this branch. We are the second largest deposit mobilisers in the country. We have around 2 lakh deposit accounts across the country which is worth about Rs 18,000 crore. Our average monthly cross mobilisation is around Rs 1,000 crore.
We maintain high standards in case of deposits. We have created kind off centralised deposit system in Delhi and that unit is ISO certified. Such deposits are an important source of funding for us. An average deposit is Rs 1 lakh is usually for three years.
About 57 per cent of our deposits, which get matured are renewed that talks a lot about the stickiness of our deposits and our service standards. Apart from all this, the brand PNB helps us a lot.
There were talks about Carlyle Group and General Atlantic Singapore to invest more in PNB Housing Finance. What is the progress there?
We are going ahead with it. The board of directors have empowered Stakeholders Relationship Committee (SRC) to select BRLMs— Kotak Mahindra Capital and JM Financial, and they are already on board.
We are going ahead with limited preference issuance of equity worth Rs 2,000 crore. The money will be here by October end or November beginning. It is a fast process.
The current large shareholders like Carlyle Group and General Atlantic are showing keen interest in this process. We will have three more investors but I cannot disclose their name yet. These three investors are mix of local and foreign investors.
There is still a lot of negativism around the real estate sector. How can that improve?
The biggest sentiment booster in the housing sector would be if delivery of homes start happening on time. This is when youngsters would like to put in their savings, avail loans and buy homes.
At present, prices of real estate, interest rates and fundamentals of economy are right. It is just the erosion of trust that is hurting the sector (before RERA was implemented).
Home buyers are thinking if they really want to invest or not in real estate. This sector can only grow by building the confidence of home buyers.
Is the economic slowdown not hurting NBFCs/HFCs?
Today, the debate is whether the slowdown is cyclical or structural. I think it is a mix of both. In Indian context, it is more cyclical than structural as the domestic economy and demands are strong.
Yes, there is a need to have some level of structural change and that change is constant. If after 2008-2009, if it is happening now after 10 years then we should not be so surprised.
The global economies are slowing down. Countries like China, the US and Britain are moving away from globalisation towards nationalistic fervour. Such changes at global level will impact but by far, India is insulated from such global impacts. It is time for us to start delivering.
Compared to 2008-2009, it does not look like India is insulated. Your comments.
This time everything is depressed in India. In 2008-2009, the time frame for the slowdown was shorter but this time it is prolonging. I think, we will overcome this in a quarter or two. By March 30, 2020, we will see a better tomorrow and that is my conviction.
While large real estate players are doing good, small players are facing a lot of challenge. What is your take?
Consolidation is the way forward in the sector. We will see corporatisation of real estate developers going forward. If small players are not reputable as large corporate houses, they will not be able to adhere to governance model.
How do you see the impact of some troubled companies in NBFC sector?
It is very unfortunate. There are about 2,000 NBFCs and HFCs in India and from that only two defaulted and now, the entire sector has been painted with the same brush.
This is not fair on the sector. The institutional lenders like mutual funds, insurance companies, EPFOs, regional provident funds etc, cannot sit on monies without investing as they have promised their investors a particular return.
So soon or later, they will come back to the sector. In a week’s time, we will be raising a very large non-convertible debentures (NCDs) from the debt market. All this shows, the market conditions are improving.
Are you planning of raising more capital this financial year?
In case of capital, we are raising Rs 2,000 crore through limited preference route. In case of debt, we are raising Rs 20,000 crore every quarter and we have been pretty successful.
Our large institutional lenders are also rolling back on maturity. However, these investors are doing far more due diligence. It is an enduring exercise to raise funds.
Rating agencies have downgraded many institutions after trouble in some NBFCs. How do you see that?
It is a frenzy situation that they got caught in. They should learn from their mistakes and also should not downgrade robust entities as that would further augment the element of mistrust.
I strongly believe that rating agencies are doing their job earnestly and diligently. But by suddenly downgrading entities, they are just making the business environment more speculative.
What are your targets for this financial year?
We will certainly grow faster than the industry average. At Assets Under Management (AUM) and deposit level, we will grow faster and robust. Our portfolio quality will be maintained. Our deposit franchise will only become stronger.
Do you seen the transmission of repo rates taking place?
Transmission will always happen with a lag and that is when the rates will move up. Transmission will take sometime but I think we should be more worried about transaction velocity.
Liquidity is there and everyone is sitting with access cash. The trouble is credit offtake has taken a hit due to speculative nature of the market. We should have faith in each other.
How are HFCs like yours trying to build trust factor among retail borrowers?
We are counselling/ advising our customers if they are making a wrong choice on a particular project. This advise is backed by the data on success and delay in completion of projects that we have access to.
Other than warning our customers, our property service group suggests projects to customers based on their financial capacity and other needs. HFCs will have to run that extra mile to build that confidence.
Have HFCs started to see improvement or will it happen within next two quarters?
After two quarters, the good times or old times will come back. But we need to prove ourselves. The real test is taking place in 2020 and not in 2019 when everything was out in open.
Is there something that you think needs to improve?
Media, rating agencies and research agencies have to play a far more responsible role of not sensationalising the entire market.