‘Further rate hikes may hit housing loan demand’: Sandip Kumar, MD and Chief Executive, LIC Housing Finance

Rising costs and declining yields are the key pressures behind the flat growth. However, we expect an improvement going forward through a better product mix and a greater focus on higher-margin businesses such as Lease Rental Discounting (LRD), Loan Against Property (LAP) and project lending. Last quarter, our margin was 2.58%, compared with 2.62% in the corresponding quarter last year. We have guided for a margin of 2.50–2.60% for FY27, and we expect to remain within that range.

Following the rate hike, we have also decided to increase lending rates by 25 basis points across both new loans and the existing portfolio, with immediate effect. This will also support our margins. How are higher interest rates likely to impact demand going forward? Since rates are rising across the industry, we do not expect the current hike to materially affect our competitive position. Further increases could eventually impact the mortgage and related businesses, but we are not seeing any signs of a slowdown in the sector at present.

What is your disbursement target for FY27? For disbursements, we have guided for 12–14% growth. Within this, project lending, which currently accounts for a small base, is expected to grow by over 100%, with a target of Rs 2,000 crore for this financial year. It is already growing at about 150%. We have changed our strategy and are now focusing on smaller projects with ticket sizes of Rs 50–100 crore.

Our current focus is on project lending, and we are also exploring inorganic growth through portfolio acquisitions, such as pool purchases. Retail lending is expected to grow by around 11.7%. Over the past two quarters, we have begun diversifying our product mix into areas such as Loan Against Property (LAP) and Lease Rental Discounting (LRD). Our strategy is to increase LAP to 20% of the retail portfolio, which should improve margins and reduce our dependence on customer lending, where competition from banks is intensifying.

How is the affordable housing segment performing currently? We are considering entering the affordable housing segment, but this would require setting up a dedicated vertical within the company. It is still at the planning stage, but we expect to make some progress on this front next year. You have challenged the NCLT's approval of Subhash Chandra's repayment plan. Is there any update on the matter?

The matter is sub judice. We have already filed complaints against personal guarantor Subhash Chandra in two cases. However, since the matter is now before the CBI, I cannot comment further. We will share any further developments. A significant portion of this quarter's net profit appears to have come from provision reversals. What is your outlook for recoveries in the second half of the year? We expect recoveries in Q3 and Q4 to help bring our gross NPA ratio down to 1.9% by the end of Q4, from the current level of nearly 2%.