Making housing affordable to all

Making housing affordable to all

L&T Housing Finance, led by its CEO, Vasudevan Ramaswami, is banking on the affordable housing segment and the self-employed customer base as some of its key segments to scale up its business in the coming years. In six to seven years, it plans to increase its loan book size to over Rs. 20,000 crore

MADHUMITA PRABHAKAR

In October 2012, when L&T Finance Holdings Pvt. Ltd (the NBFC arm of the engineering giant Larsen & Toubro) acquired Indo Pacific Housing Finance (IPHF), it had a clear vision in mind; to foray into the consumer housing loan business, and to create value for its stakeholders by driving more ownership for the self-employed and salaried segment (customers) in India.

To drive this vision, the company appointed Vasudevan Ramaswami, the head of the Group operations and technology function at L&T Financial Services, and the former chief operating officer of Reliance Retail Ltd, as the CEO of L&T Housing Finance Pvt. Ltd. Under his leadership, the company’s loan book grew from Rs. 161 crore in 2012 to Rs. 2,000 crore in FY14. Today, its products and services include home loans, loan against property, balance transfers, top-up loans and construction funding. While its products are focussed both on the salaried and the self-employed segment, it plans to further leverage on the latter segment, and also enter into the affordable housing space (with a ticket size of Rs. 15 lakh to Rs. 25 lakh). In seven years, Ramaswami aims to steer the company to increase its loan book size to over Rs. 20,000 crore.

The mortgage business itself is a secure lending business. Indians view home ownership as an important asset so it’s an emotional bond as well. They would like to keep it, so the obligation is there to ensure that the loan is closed quickly.

In this interview with The Smart CEO, he takes us through his vision for L&T Housing Finance in the coming years, the company’s key expansion strategies, his leadership style and more.

When you took charge of the housing division, what were your key focus areas for growth? 

When we took over IPHF in 2012, our immediate focus was on driving momentum for the business and integrating people, culture and processes into the organisation. On the people front, we retained some employees from IPHF, transferred a few from the parent company, and hired specific senior leaders from the industry. On the business front, our initial goal was to gain market visibility, thus, we decided to focus only on eight to nine Tier I markets (such as Mumbai, Delhi and Bangalore). Going forward, we will also be focussing on the affordable housing segment, which typically falls into a ticket size of Rs. 15 lakh to Rs. 25 lakh. This will help fuel further expansions into Tier II and Tier III markets. Currently, we have a presence in 29 markets.

How does LTHFL fare against industry competitors? 

The housing finance sector in India is still at a nascent stage as compared to other South East Asian markets; the sector contributes to only 7.5 per cent of the GDP. This indicates a huge opportunity for all players to create value in this segment. Thus, I don’t think we’re strictly competing against players like HDFC and LIC (which have been in the industry for over 35 years now). Instead, our immediate focus will be on creating value proposition for our customers by building innovative products and increasing the loan book size.

What, in your opinion, are the risks involved in this sector? 

The mortgage business itself is a secure lending business. There are reasonably good regulatory norms as well as new policies that have been introduced to secure loans and collect from deteriorating loans.  Another advantage here is, in India, people view home ownership as an important asset so it’s an emotional bond as well. They would like to keep it, so the obligation is there to ensure that the loan is closed quickly. However, despite the advantages, what is important here is to ensure that the company appraises the customer in such a way that he/she will be able to repay the loan within the lending period.

What measures do you adopt to reach out to your potential customers? 

We have a strong internal and external distribution channel. While the external channel (direct sales structure) caters to the need of multiple other financial institutions, our own sales teams work with specific developers. We also have the advantage of utilising the L&T ecosystem to reach out to existing customers, partners and employees of the parent company and its subsidiaries. In fact, recently, we’ve developed a direct to customer electronic channel, which will provide instant e-approval for their loan and provide fast track sanctions.

Where do you see the company five years from now?

By this year end, we’ll be looking to establish a presence in 30 to 32 markets. And, we would like to further grow our business across the home loans, loan against property and construction loans segment. In terms of loan book size, we aim to touch over Rs. 20,000 crore in seven years.


UPFRONT WITH VASUDEVAN RAMASWAMI

My leadership style

I’d like to believe that I am a participative leader. I’m quite keen on driving results and outcomes. In fact, I always tell my team, you can create a painting but unless you put it on the wall, nobody will notice it. This means, whether we work hard or work smart, unless we show positive and timely results, we’re not there yet.

The best advice I’ve received

There’s a book called ‘7 habits of highly effective people’ by Stephen R. Covey. In that, he says, nobody can make you unhappy without your permission. And, I strongly believe in this. There will be issues thrown at you but how it turns out depends entirely on how you react to it.

The biggest challenge that has kept me awake at night

In one of my earlier organisations, we had to take a decision to downsize the organisation due to certain conditions that the group company was facing. Communicating why that was needed, rolling out the plan in an organised manner, and personally having to address some of the displaced employees was among the toughest challenges I’d faced. 

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