Industry Report

Analysis of Housing
Finance Market in India

For Bajaj Housing Finance Limited
June 2024
1
Contents
Macroeconomic scenario in India ............................................................................................... 3
Overview and Market Landscape of NBFCs in India .................................................................22
Housing scenario in India ..........................................................................................................30
Overview of Housing Finance Market of India ...........................................................................44
Overview of Prime Housing Finance Market in India .................................................................54
Overview of Affordable Housing Finance Market in India (<Rs.2.5 million) ................................58
Loan Against Property (LAP).....................................................................................................66
Overview of Real Estate Financing and Lease Rental Discounting ..........................................76
Peer Benchmarking ..................................................................................................................81
List of formulae .........................................................................................................................90
2
Macroeconomic Scenario in India
Global economy is witnessing tightening of monetary conditions
The global economy is witnessing tightening of monetary conditions in most regions (United States of
America, United Kingdom among others). As per the International Monetary Fund (IMF) (World Economic
Outlook Update – April 2024), global growth prospects for FY24 and FY25 will hold steady at 3.2%. The
trade outlook for the calendar year 2024 is expected to be negatively impacted by geopolitical frictions,
persisting inflation and lower global demand. Furthermore, deceleration in domestic growth could lead to
some softening in imports. The central bank policy rates expected to be elevated to fight inflation amid
withdrawal of fiscal support and low underlying productivity growth. Due to restrictive monetary policy,
inflation is falling in most regions. As per IMF (World Economic Outlook Update – April 2024), global
headline inflation is expected to be around 5.9% in 2024 and 4.5% in 2025.
India expected to remain one of the fastest growing economies in the world
The Indian economy was among the fastest-growing in the world prior to onset of the Covid-19 pandemic.
In the years leading up to the global health crisis which disrupted economic activities, the country’s
economic indicators posted gradual improvements owing to strong local consumption and lower reliance
on global demand Despite global geopolitical instability, India continues to maintain its position as one of
the fastest-growing economies globally. In February 2024, the National Statistical Office (NSO) in its second
advance estimate of national income estimated the real GDP to grow at 7.6% year-on-year basis in fiscal
2024, while Q4 FY24, growth was much stronger than 5.9% factored in in the second advance estimates
of the National Statistics Office (NSO) in February. This prompted NSO to revise the FY24 GDP growth
estimate to 8.2%. Going forward, CRISIL MI&A expects a moderation in GDP growth rate to 6.8% in FY25,
largely due to factors such as demographic advantage, robust domestic demand, economic reforms,
manufacturing and infrastructure development, technological advancements, and digital push.
India’s economy expected to grow at 6.8% in fiscal 2025
250 230-240 12%

8.3% 9.1%
8.0% 8.2%
6.8% 6.5% 7.2% 6.8%
200 8%
3.9%
184
150 172 4%
160
140 145 149
131 137
100 114 123 0%
50 -5.8% -4%
0 -8%
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25P FY29P
Real GDP (Rs. Tn) Growth (y-o-y)
Note: E = Estimated, P = Projected; GDP growth till fiscal 2023 is actuals. GDP Estimates for fiscals 2023- 2024 is based on NSO
3
Estimates and 2024-2025 is projected based on CRISIL MI&A estimates and that for fiscals 2025-2029 based on IMF estimates;
Source: NSO, CRISIL MI&A, IMF (World Economic Outlook – April 2024 update)
Over the past three fiscals (FY22-24), Indian economy has outperformed its global counterparts by
witnessing a faster growth. Going forward as well, IMF projects that Indian economy will remain strong and
would continue to be one of the fastest growing economies.
India is one of the fastest-growing major economies (GDP growth, % year-on-year)
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
2019 2020 2021 2022 2023 2024E 2025P 2026P 2027P 2028P
India 3.9 -5.8 9.7 7.0 7.8 6.8 6.5 6.5 6.5 6.5
China 6.0 2.2 8.5 3.0 5.2 4.6 4.1 3.8 3.6 3.4
United Kingdom 1.6 -10.4 8.7 4.3 0.1 0.5 1.5 1.7 1.7 1.6
United States 2.5 -2.2 5.8 1.9 2.5 2.7 1.9 2.0 2.1 2.1
Brazil 1.2 -3.3 4.8 3.0 2.9 2.2 2.1 2.1 2.0 2.0
Russia 2.2 -2.7 6.0 -1.2 3.6 3.2 1.8 1.3 1.3 1.3
South Africa 0.3 -6.0 4.7 1.9 0.6 0.9 1.2 1.4 1.4 1.4
Japan -0.4 -4.1 2.6 1.0 1.9 0.9 1.0 0.8 0.6 0.6
Note: All forecasts refer to IMF forecasts. GDP growth is based on constant prices, Growth numbers for India till 2022 are for financial
year, 2023 is as per IMF estimates for FY23. Post FY24, all estimates for India are as per calendar year. Data represented for other
countries is for calendar years, E: Estimated, P: Projected; Source: IMF (World Economic Outlook – April 2024), CRISIL MI&A
Repo rate remains unchanged, with phase of aggressive rate hikes behind us
The current fiscal begins with unchanged repo rates by the RBI. Globally, major central banks are currently
cautious about cutting rates, amid slower disinflation and strong growth. On the domestic front, while the
forecast of an above-normal monsoon bodes well for disinflation, freak weather events and crude oil prices
are the lurking risks. The Reserve Bank of India's (RBI) MPC in its April 2024 meeting voted to keep the
policy rates unchanged, with a 5-1 majority. The repo rate remains at 6.50%, standing deposit facility (SDF)
at 6.25%, and marginal standing facility (MSF) at 6.75% It also maintained status quo on the 'withdrawal of
accommodation' stance, with a 5-1 majority.
Repo rate in India (%)
4
6.25 6.50 6.50 6.50 6.50 6.50
5.90
4.90
4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Q1FY21
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
Q3FY22
Q4FY22
Q1FY23
Q2FY23
Q3FY23
Q4FY23
Q1FY24
Q2FY24
Q3FY24
Q4FY24
Source: RBI, CRISIL MI&A
Consumer Price Index (“CPI”) inflation to average at 4.5% in FY25
Consumer price index (CPI) inflation eased to a five-month low of 4.9% in March 2024 from 5.1% in
February. While core inflation declined to a record low of 3.3%, fuel deflated 3.2% on the back of lower
domestic fuel prices. The worry, though, remains on persistently high food inflation, at 8.5%. Higher cereals
inflation, erratic vegetable inflation and elevated pulses inflation are a cause of concern given the India
Meteorological Department's (IMD) prediction of higher-than-normal temperatures between April and June
2024. CRISIL MI&A expects CPI inflation to continue to soften in FY25 to 4.5% from an estimated 5.5% in
FY24, supported by the assumption of a normal monsoon, softer domestic demand, and benign global oil
prices.
Inflation to moderate to 4.5% in Fiscal 2025

6.2 6.7
5.5 5.5
4.9 4.5 4.8 4.5
3.6 3.4
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25P
CPI General Index (%)
Note: E = Estimated; P = Projected, Source: CRISIL MI&A
Macroeconomic outlook for FY25

Macro
FY24E FY25P Rationale for outlook
variables
5
Slowing global growth is likely to weaken India’s exports, while peak impact of
past rate hikes and lower fiscal impulse could temper domestic demand.
Real GDP
8.2% 6.8% Despite the lower forecast, India continuous to grow at the highest rate among
(y-o-y)
major economies propelled by budgetary support to capital expenditure and
strong rural demand to support growth.
Consumer price
Lower commodity prices, base effect, and cooling off domestic demand is
index (CPI) 5.5% 4.5%
likely to help in moderating inflation in FY25.
inflation (y-o-y)
10-year A moderate reduction in gross market borrowings to lower pressures on yields

Government in FY25. This, coupled with lower inflation, is likely to moderate yields in FY25.
7.0% 6.8%
security yield India’s inclusion in the JP Morgan Emerging Market Bond Index is favourable
(Fiscal end) for capital flows into government debt.
Persistent efforts in fiscal consolidation aided by moderation in revenue spend

Fiscal Deficit
5.8% 5.1% and robust tax collections to bring down the deficit and lead to lower
(% of GDP) *
government market borrowings.
CAD (current Softer crude oil prices and moderation in domestic growth will keep the trade
account deficit in check despite tepid exports of goods. Alongside, robust services
-1.0% -1.0%
balance/GDP) trade surplus and healthy remittances will keep the current account deficit
(%) (CAD) in check
Rs/$ (March Narrower CAD and healthy foreign portfolio flows into debt amid a favourable
83.0 83.5
average) domestic macro environment will support the rupee
E – Estimated, P – Projected, *FY24 and FY25 numbers are government’s revised and budget estimates; Source: Reserve Bank of
India (RBI), National Statistics Office (NSO), CRISIL MI&A
Positive government measures to aid economic growth for India
• The Interim Budget of 2024-25 announced a 17.7% rise in capital expenditure in the next fiscal with
infrastructure sectors seeing an increase in allocations. Budgeted capex allocation for the next fiscal is
4.6% of the GDP, which is up from 4.3% for fiscal 2024. Public sector capex has also gone up to 5.6%.
In a year where the Indian economy is expected to see a cyclical slowdown owing to global slowdown
and impact of interest rates and tightening financial conditions on domestic demand, higher capex
would support growth in the economy. Policy pushes and new age opportunities such as cutting-edge
technologies, digitization, cashless economy, and decentralization of services to lead capex growth in
Fiscal 2025.
• Budgetary support towards rural areas through rural employment and incomes will support rural
demand. Aggregate spends on the four key schemes – Mahatma Gandhi National Rural Employment
Guarantee Act (MNREGA), Pradhan Mantri Awas Yojana (Gramin) (PMAY-G), Pradhan Mantri Gram
6
Sadak Yojana (PMGSY) and Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) are budgeted to
increase 13.2% year-on-year in FY25 after a ~10% drop in each of the previous two fiscals.
Key structural reforms: Long-term positives for the Indian economy
• The GST regime has been stabilizing fast and is expected to bring more transparency and formalization,
eventually leading to higher economic growth. Number of GST returns filed saw a ~38% jump from
FY19 (~169 million) to FY23 (~232 million), till January 2024 a total of ~90 million GST returns have
been filed in FY24.
• PMAY was introduced in 2015 to provide affordable housing for all by the end of 2022. The timelines
were revised to fiscals 2024 and 2025 for PMAY-Gramin and PMAY-Urban respectively due to delays
in completion. Execution under the scheme has been encouraging with ~2.60 crores houses being
completed as of May 2024, out of the targeted 2.95 crore houses. The target for the next five years has
been further increased by ~2 crore houses in the FY25 budget estimate; a 68% addition to the current
target of ~3 crore houses. The move provides an impetus to the real estate sector as well its
stakeholders including – developers, engineering, procurement and construction contractors, allied
industries such as steel, cement etc.
• The government has also launched the JAM trinity which aims to link Jan Dhan accounts, mobile
numbers and Aadhar cards of all Indian nationals to transfer cash benefits directly to the bank account
of the intended beneficiary and avoid leakage of government subsidies.
• Government launched the Digital India program, on 1st July 2015 with the vision of transforming India
into a digitally empowered society and a knowledge-based economy, by ensuring digital access, digital
inclusion, digital empowerment and bridging the digital divide. Some of the key initiatives and related
progress under Digital India are as follows-
o Unified Mobile Application for New-age Governance (UMANG) – for providing government
services to citizens through mobile. More than 1,984 e-Services as of March 2024 and over 4
billion transactions have taken place on UMANG as of March 2024.
o Unified Payment Interface (UPI) is the leading digital payment mechanism, it has onboarded
550+ banks and has facilitated more than 13,440 million transactions (by volume) worth Rs
19.7 trillion in March 2024.
o Cyber Security: The Government has taken necessary measures to tackle challenges about
data privacy and data security through introducing the Information Technology (IT) Act, 2000
which has necessary provisions for data privacy and data security.
o Common Services Centers – CSCs are offering government and business services in digital
mode in rural areas through Village Level Entrepreneurs (VLEs). Over 400 digital services are
being offered by these CSCs. As of March 2024, 0.58 million CSCs are functional (including
urban & rural areas) across the country, out of which, 0.47 million CSCs are functional at Gram
Panchayat level.
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Overall, these initiatives will improve the digital connectivity of Indians along with boosting business
sentiment, thereby creating new opportunities.
Key growth drivers
India has the world’s largest population
As per Census 2011, India’s population was ~1.25 billion, and comprised nearly 245 million households.
The population, which grew at nearly 1.5% CAGR between 2001 and 2011, is expected by CRISIL MI&A
to increase at 1.1% CAGR between 2011 and 2021 to reach 1.40 billion. The population is expected to
reach 1.5 billion by 2031, and the number of households are expected to reach ~385 million over the same
period.
India’s population growth trajectory and number of households
in millions
1400 1423 1520
1250
1070
890
245 319 385
119 148 187
1991 2001 2011 2021 2023E 2031P
Population Households
Note: As at the end of each Fiscal. P: Projected, Source: United Nations Department of Economic and Social Affairs,
(https://population.un.org/wpp/), Census India, CRISIL MI&A
Urbanization
Urbanisation is one of India’s most important economic growth drivers. It is expected to drive substantial
investments in infrastructure development, which in turn is expected to create jobs, develop modern
consumer services, and increase the ability to mobilise savings. India’s urban population has been rising
consistently over the decades. As per the 2018 revision of World Urbanization Prospects, the urban
population was estimated at 36% of India’s total population in 2022. According to the World Urbanization
Prospects, the percentage of the population residing in urban areas in India is expected to increase to
37.4% by 2025.
Urban population as a percentage of total population (%)
8
in % age 35 36 37
31
26 28
23
18 20
17
1950 1960 1970 1980 1990 2000 2010 2020 2022 2025P
Note: E- Estimated, P – Projected, Source: Census 2011, World Urbanization Prospects: The 2018 Revision (UN)
Urban population as a percentage of total population globally
90
80
70
60
50
40
30
20
10
0
1960 1970 1980 1990 2000 2010 2020 2022 2023
India 17.9 19.8 23.1 25.5 27.7 30.9 34.9 35.9 37.4
Sri Lanka 16.4 17.6 18.6 18.5 18.4 18.2 18.7 19.0 19.6
Pakistan 22.1 24.8 28.1 30.6 33.0 35.0 37.2 37.7 38.7
China 16.2 17.4 19.4 26.4 35.9 49.2 61.4 63.6 66.5
Germany 71.4 72.3 72.8 73.1 75.0 77.0 77.5 77.6 78.0
Malaysia 26.6 33.5 42.0 49.8 62.0 70.9 77.2 78.2 79.7
France 61.9 71.1 73.3 74.1 75.9 78.4 81.0 81.5 82.3
United States 70.0 73.6 73.7 75.3 79.1 80.8 82.7 83.1 83.7
United Kingdom 78.4 77.1 78.5 78.1 78.7 81.3 83.9 84.4 85.1
Note: P: Projected ; Source: Census 2011, World Urbanization Prospects: The 2018 Revision (UN)
Increasing per capita GDP
India’s per capita net national income expanded 6.7%% in fiscal 2024, reflecting robust economic growth
and the government’s continued endeavor to make the country an upper middle-income economy. In FY23,
India’s per capita income expanded by 5.9%. As per IMF estimates, India’s per capita income (at constant
prices) is expected to grow at 5-6% CAGR in real terms from FY24 to FY27.
FY2024
Growth at constant prices (%)
Per (Rs. ‘000)
capita Current Constant

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
NNI prices prices
183 106 4.6 6.2 6.7 6.8 5.7 5.8 2.9 -7.6 7.6 5.9 6.7
Note: P – projected. (^) Per capita NNI as per Second Advance Estimates of National Income, 2023-24
9
Source: Ministry of Statistics and Program Implementation (MoSPI), International Monetary Fund (IMF), CRISIL MI&A
Trend in Nominal GDP per capita (at current prices)
(In Rs. 000)
274
211 227
195
172
143 152 146
118 130
107
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25P FY27P
Note: P - projected. FY24 estimates are based on second advance estimates by MoSPIFY25 – FY27 Projections based on IMF –
World Economic Outlook (April 2024 update)
Source: MOSPI, IMF, CRISIL MI&A
Contribution of different sectors to India’s growth
Trend in Gross Value Added (GVA) at current prices by economic activity denotes that financial, real estate
and professional services have consistently contributed the highest to the GVA and contributed an
estimated 22% in fiscal 2024 and stood at Rs. 34,820 Bn., Total GVA at current prices witnessed a CAGR
of 6.9% from FY22 to FY24.
Rs.138.8 Tn Rs.148.1 Tn Rs. 158.3 Tn Mining & Quarrying
2%
3% 2%
3% 2%
3% Electricity, Gas, Water Supply & Other
8% 8% 8% Utility Services
16% 15% 14% Construction
14% 14% 15% Manufacturing
17% 18% 18% Public Administration, Defence & Other

Services*
19% 18% 18% Trade, Hotels, Transport, Communication
& Services related to Broadcasting
Agriculture, Livestock, Forestry & Fishing
22% 21% 22%
Financial, Real Estate & Professional
FY22E FY23E FY24E Services
Note: *- Public Administration, Defense & Other Services category includes the Other Services sector i.e. Education, Health,
Recreation, and other personal services; E- Estimated; Fiscal 2022 are Revised Estimates, Fiscal 2023 are Provisional Estimates,
Fiscal 2024 are First Advance Estimates as per NSO.
Source: MOSPI, CRISIL MI&A
Aspirational Indian population to help sustain growth for the country
Proportion of Aspirational India (defined as households with annual income of between Rs. 0.2 to 1 million)
has been on a rise over the last decade and is expected to grow further with continuous increase in the
10
GDP and household incomes. CRISIL MI&A estimates that there were 41 million aspirational households
in India as of FY12, and by FY30, they are projected to increase to 181 million households. A large number
of these households, which have entered the aspirational Indian bracket in the last few years, are likely to
be from semi-urban and rural areas. CRISIL MI&A believes that the improvement in the literacy levels,
increasing access to information and awareness, increases in the availability of necessities, and the
improvement in road infrastructure has led to an increase in aspirations, which is likely to translate into
increased opportunities for financial service providers.
Aspirational India households (annual income between Rs. 0.2 to 1 million) to witness
moderate growth over FY12 to FY30
-1.25% CAGR 8.60% CAGR 15.57% CAGR
212.5 217.4 208.7

169.4 181.0
102.7
60.1
41.0 34.7
2.6 5.7 9.6
Below Rs 0.2 million Rs 0.2 to 1 million Rs 1 million and above

FY12 E FY17 E FY22 E FY30 P
Note: E: Estimated, P: Projected; Source: CRISIL MI&A
Financial Inclusion on a fast path in India
According to the World Bank’s Global Findex Database 2021, the global average of adult population with
an account opened with a bank, financial institution, or mobile money provider, was approximately 76% in
calendar year 2021. India’s financial inclusion has improved significantly over calendar years 2014 to 2021
as adult population with bank accounts increased from 53% to 78% (Source: Global Findex Database) due
to the Indian government’s concentrated efforts to promote financial inclusion and the proliferation of
supporting institutions.
Adult population with a bank account (%): India vis-à-vis other countries (2021)
100%
100%
100%
100%
100%
99%
99%
98%
98%
98%
97%
96%
95%
90%
89%
89%
85%
84%
79%
78%
76%
74%
74%
72%
52%
Japan
Thailand
federation
Sri Lanka
China
India
Germany
United Kingdom
Kenya
Singapore
Italy
Denmark
United States
Brazil
World
Saudi Arabia
Netherlands
Turkey
Australia
Argentina
Canada
France
Spain
South Africa
Indonesia
Russian
Note: 1. Global Findex data for India excludes northeast states, remote islands, and selected districts. 2. Account penetration is for
the population within the age group of 15+, Source: World Bank – The Global Findex Database 2021, CRISIL MI&A
11
A significant proportion of the population still lacks access to formal banking facilities. According to
NABARD All India Rural Financial Inclusion Survey 2016-17, 40% loans were reported as taken from non-
institutional investors or informal channels like relative and friends, money lenders and local landlords.
According to the World Bank’s Global Findex Database 2021, only 12% of the Indian population borrowed
money through a formal channel like financial institutions which has increased significantly from 8% in 2017,
this is very low compared to other developed and developing countries.
Only 12% of India’s population borrowed money from formal sources (CY2021)
India 12%
45%
South Africa 18%
60%
China 29%
56%
Russia 30%
51%
Brazil 41%
59%
UK 55%
62%
USA 66%
76%
Population that borrowed money from formal sources (2021) Population that borrowed any money (2021)
Note: 1. Global Findex data for India excludes northeast states, remote islands, and selected districts. 2. Data is for the population
within the age group of 15+ 3. Money borrowed from formal sources includes money borrowed from Banks, NBFCs and usage of
credit card.
Source: World Bank - The Global Findex Database 2021, CRISIL MI&A
Multiple initiatives have been taken by the Government of India to promote financial inclusion in the nation,
the government also launched the Pradhan Mantri Jan Dhan Yojana to provide banking services to all
households in the country. As of 31st March 2024, ~0.52 billion PMJDY accounts had been opened, of
which 67% were in rural and semi-urban areas, with total deposits of Rs. 2,299 billion.
Number of PMJDY accounts Total balance in PMJDY accounts
(in billions) (in ₹ billions) 2,299

0.5
0.5 1,988
0.5
0.4 1,665
0.4
0.4 1,455
0.3 1,184
0.3
961
0.2 785
630
0.1
357
146
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
Source: PMJDY; CRISIL MI&A Source: PMJDY; CRISIL MI&A
12
Household savings expected to increase
India’s slowing economy took a toll on much-needed savings too, with the Gross Domestic savings rate
touching a 15-year low in FY20 to ~27%, post which in the next two fiscals the savings have witnessed a
growth and touched ~30% during FY22. Despite the slow-down, India remains favorable in terms of gross
domestic savings rate compared with most other emerging market peers at 29% in FY22, greater than the
world average of 28%.
India’s gross domestic savings rate is higher than global average (2022)
60%
46%
38% 33% 31% 29% 29% 28% 27% 23% 19% 17% 17% 16%
Germany
France
China*
India
Brazil
US
South
UK
Switzerland
World
Singapore
Korea
Malaysia
Australia
Africa
Note: Gross Domestic Saving consists of savings of household sector, private corporate sector and public sector; (*) Data as of
CY2022; Source: World Bank1, Handbook of Statistics on Indian Economy 2022-23, RBI, MOSPI, CRISIL MI&A
Specifically, household savings as a percentage of GDP has been sliding since FY12 potentially due to an
increase in borrowings for consumption needs posed by higher inflation rates, with its share as a proportion
of GDP falling significantly from 23.6% in FY12 to 18.0% in FY16. Household saving increased significantly
in FY21 to reach 22.7%, post which it declined to 20.2% in FY22 and in FY23, household savings as
percentage of GDP stood at 18.2%. CRISIL MI&A expects India to continue being a high savings economy
owing to higher gross domestic savings rate as compared to world average.
Household savings as a percentage of GDP declined in FY22 and FY23
Household Savings (% of GDP)
25.2%
23.6% 23.1% 23.6% 22.5%
22.4% 22.7%
20.3% 20.3% 20.2%
19.6% 19.3% 19.1%
18.0% 18.1% 18.2%
FY18
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY19
FY20
FY21
FY22
FY23
Source: Ministry of Statistics and Programme Implementation (MOSPI), RBI, CRISIL MI&A
13
Gross domestic savings trend
Mar- Mar- Mar- Mar-

Parameters (Rs. Billion) Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
20 21 22 23
GDS 36,082 40,200 42,823 48,251 54,807 60,004 59,411 57,869 73,631 81,500
Household sector savings

(net financial savings,
savings in physical assets 22,853 24,391 24,749 27,871 32,966 38,446 38,452 45,056 47,423 49,632
and in the form of gold and
silver ornaments)
Household sector savings

63% 61% 58% 58% 60% 64% 65% 78% 64% 61%
as proportion of GDS (%)
Gross financial savings 11,908 12,572 14,962 16,147 20,564 22,637 23,246 30,670 26,120 29,736
Gross financial savings (%

33.0% 31.3% 34.9% 33.5% 37.5% 37.7% 39.1% 53.0% 35.5% 36.5%
of GDS)
Financial liabilities 3,587 3,768 3,854 4,686 7,507 7,712 7,747 7,374 8,993 15,572
Savings in physical assets 14,164 15,131 13,176 15,946 19,442 23,095 22,522 21,355 29,683 34,834
Savings in physical assets

39% 38% 31% 33% 35% 38% 38% 37% 40% 43%
as a proportion of GDS (%)
Savings in the form of gold

368 456 465 465 467 427 431 405 613 634
and silver ornaments
Note: The data is for financial year ending March 31. Physical assets are those held in physical form, such as real estate, etc.
Source: MOSPI, National Accounts Statistics, CRISIL MI&A
Household savings growth
(in Rs. Bn)
47,423 49,632
45,056
38,446 38,452
32,966
27,871
22,353 22,853 24,391 24,749
20,656
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Note: The data is for the financial year ending March 31.
Source: MOSPI, CRISIL MI&A
14
CRISIL MI&A expects India to continue being a high savings economy and savings rate increasing in the
medium-term, as households become more focused on building a budget and financial plan for the future
post the COVID-19 pandemic-induced uncertainty.
Physical assets still account for majority of the savings
Unlike most other countries, where financial savings account for a significant proportion of savings, physical
assets in the form or real estate, gold and silver still account for most household savings in India. Household
savings in physical assets witnessed an increase to 71% in FY23 from 69% in FY12. The share of savings
in physical assets dipped during FY21 (covid pandemic year) to 48% due to nation-wide lockdowns and
slowdown in household construction. Post covid, during FY22 with opening of lockdown’s this share
increased significantly to 63.9% and further to 71.5% in FY23, due to increase in prices of gold and silver
during the fiscals along with rise in construction of houses. Going forward, CRISIL MI&A expects the share
of financial assets as a proportion of net household savings to increase over the next five years.
Trend of household savings in India
31.0% 33.0% 28.5%

36.4% 36.1% 41.1% 39.6% 38.8% 40.3% 36.1%
44.9% 51.7%
69.0% 67.0% 71.5%

63.6% 63.9% 58.9% 60.4% 61.2% 59.7% 63.9%
55.1% 48.3%
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Saving in physical assets (including gold & silver) Net Financial Saving
Note: The data is for financial year ending March 31, Source: Handbook of Statistics on Indian Economy 2022-23, RBI, MOSPI,
CRISIL MI&A
Financial penetration to rise with increase in awareness of financial products
Overall literacy rate in India is at 77.7% as per the results of recent NSO survey conducted from July 2017
to June 2018, which is still below the world literacy rate of 86.5%. However, according to the National
Financial Literacy and Inclusion Survey (NCFE-FLIS) 2019, only 27% of Indian population is financially
literate indicating huge gap and potential for financial services industry. The survey defines financial literacy
as combination of awareness, knowledge, skill, attitude, and behaviour necessary to make sound financial
decisions and ultimately achieve individual financial wellbeing. As per Multiple survey indicator for 2020-
21, launched in 2023, 89.4% of total adult population of India had a bank account in any financial institution,
the report also stated that 92.4% of the male adult population and 86.3% of female adult population in India
had a bank account in any financial institution.
15
Overall literacy rate on the rise in India
77.7%
74.0%
64.8%
2001 2011 2018
Source: Census 2011, NSO Survey on household social consumption (2017-18),CRISIL MI&A
With increasing financial literacy, mobile penetration, awareness, and the Prime Minister’s Jan Dhan Yojana
bank accounts (scheme aimed at bringing the unbanked under the formal banking system), there has been
a rise in the participation of individuals from non-metro cities in banking. With more people attached to the
formal banking sector, the demand for financial products in smaller cities has seen a major uptick in recent
years. Going forward, CRISIL MI&A expects financial penetration to increase on account of increasing
financial literacy.
Financial Literacy across India as of 2019
37%
32% 33% 30% 27%
21% 20%
Central India Eastern India Northern India North eastern Southern India Western India Overall India
India
Source: National Financial Literacy and Inclusion Survey (NCFE-FLIS) 2019 Report, National Centre for Financial Education
Digitization to support economic growth and financial services
Technology is expected to play a pivotal role in taking the financial sector to the next level of growth, by
helping to surmount challenges stemming from India’s vast geography, which makes physical footprints in
smaller locations commercially unviable. Technology is conducive for India, considering its demographic
structure where the median age is less than 30 years. The young population is tech savvy and at ease with
using it to conduct the entire gamut of financial transactions. With increasing smartphone penetration and
faster data speeds, consumers are now encouraging digitization as they find it more convenient. Digitization
is expected to help improve efficiency and optimize costs. Players with better mobile and digital platforms
are expected to draw more customers and emerge as winners in the long term.
Mobile penetration: Higher mobile penetration, improved connectivity, and faster and cheaper data speed,
supported by Aadhaar and bank account penetration have led India to shift from being a cash-dominated
economy to a digital one.
16
Data-savvy and younger users to drive adoption of smartphones
42% 40% 37% 36% 35%

62% 58% 52%
70%
58% 60% 63% 64% 65%

38% 42% 48%
30%
FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24P FY25P

Smartphone installed base Feature phone installed base
Note: E: Estimated, P: Projected; Source: CRISIL MI&A
Rise in 4G and 5G penetration and smartphone usage
As per projections, India had 1,170 million wireless subscribers at the end of FY24. The reach of mobile
network, internet and electricity is continuously expanding the subscriber footprint to remote areas leading
to rising smartphone and internet penetration in India. In FY23, 5G was launched which led to conversion
of 25 million subscribers to 5G, as it was offered at 4G data prices. In FY25, CRISIL MI&A expects 5G
subscribers to rise drastically to 100 million and 150 million respectively since data consumption will
increase due to high usage on OTT platforms, in education services, banking services, healthcare, and the
gaming industry.
All-India mobile and data subscriber base
FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24P FY25P
Wireless subscribers (million) 1,170 1,183 1,162 1,157 1,181 1,142 1,144 1,170 1,189
Data subscribers (million) 401 473 615 720 799 814 883 917 933
Data subscribers as a proportion of

34% 40% 53% 62% 68% 71% 77% 78% 78%
wireless subscribers
4G data subscribers (million) 131 287 478 645 719 734 786 746 713
4G data subscribers’ proportion 33% 61% 78% 90% 90% 90% 89% 81% 76%
Note: P: Projected, Source: TRAI, CRISIL MI&A
Proportion of data subscribers is hence expected to rise to ~78% in FY25 from ~62% at FY20. India’s 4G
data rates are among the lowest in the world. So, a combination of affordable handsets, growing consumer
preference for data on the go and affordable data tariffs are set to accelerate the adoption of wireless
internet in India, leading to a 4G data subscriber proportion at ~90% in FY23.
Digital payments have witnessed substantial growth
Total digital payments in India have witnessed significant growth over the past few years. Between FY18
and FY24, the volume of digital payments transactions has increased from 14.6 billion to 164.4 billion,
17
growing at a CAGR of ~50%, causing its share in overall payment transactions to increase from 59% in
FY18 to 97% in FY24. During the same period, the value of digital transactions has increased from Rs.
1,370 trillion in FY18 to Rs 2,428 trillion in FY24. Consumers are increasingly finding transacting through
mobile convenient. CRISIL MI&A expects the share of mobile banking and prepaid payment instruments to
increase dramatically over the coming years. In addition, CRISIL MI&A expects improved data connectivity,
low digital payment penetration and proactive government measures to drive digitalization in the country,
transforming it into a cashless economy.
Trend in value and volume of digital payments
3,000 5% 1% 3% 100%
9%
2,500 23%
80%
38% 2,428
2,000 41%
2,087 60%
1,500 1,744
1,637 1,620
1,415
40%
1,000 1,370
500 20%
59% 62% 77% 91% 95% 99% 97%
- 0%
FY18 FY19 FY20 FY21 FY22 FY23 FY24
Digital transactions (volume) Non-digital transactions (volume) Value (Rs. Trillion)
Note: Digital Payments includes RTGS payments, Credit transfers (AePS, APBS, ECS Cr, IMPS, NACH, NEFT, UPI), Debit
Transfers (BHIM, ECS Dr, NACH Dr, NETC), Card Payments (Debit and Credit Cards) and Prepaid Payments Instruments; Source:
RBI, CRISIL MI&A
Credit Through UPI
The RBI recently announced a proposal to broaden the United Payments Interface (UPI) scope by allowing
transfer to and from pre-sanctioned credit lines with banks. Previously to this announcement, only amounts
held in bank deposits could be transferred through the UPI, this will allow overdraft accounts, credit cards
and prepaid wallets to be eligible for linking to UPI. As per the announcement, this step enables the inclusion
of credit lines as a funding account.
Digital Public infrastructure reforms by Government of India
Digitization improves the transparency and efficiency of government processes, and widespread digital
transformations help governments and institutions with policy implementation and broad policy outreach.
However, digital platforms built too specific or narrowly for a particular context may not be the most effective
or efficient as policies, governing objectives, and societal conditions change. The key idea for Digital Public
Infrastructure (DPI) is not the complete digitization of narrow public services but the establishment of a
building block of digital modularity, which can be used modularly by both government and private players
to create the specific digital infrastructure required. The India Stack is a collective name for a set of open
APIs and public goods in digital form.
18
Open Credit Enablement Network (OCEN)
Open Credit Enablement Network (OCEN) was introduced as a step for promoting financial inclusion and
democratization of credit in India. OCEN is set of open standards which facilitates interactions and
collaborations among borrowers, lenders, lending service providers, and technology service providers. This
will help various digital platforms in leveraging their position in delivery of credit and value addition in lending
value chain. Moreover, OCEN will also promote innovation in distribution of credit, making loans accessible
to MSMEs, small vendors and individuals, leading to financial inclusion.
Use of generative AI and new technologies increasing productivity
Generative AI, or Gen AI, leverages extensive training on large datasets to swiftly produce diverse content
forms like text and multimedia in response to prompts. Gen AI, exemplified by ChatGPT in BFSI, enables
efficient, conversational banking, delivering prompt and responses, enhancing customer experiences, and
saving time. Gen AI does well in fraud prevention, where it can swiftly detect potentially fraudulent activity
by analysing customer behaviour patterns. This can help BFSI companies to take proactive measures to
help bolster transaction security. Gen AI aids in risk analysis & synthetic data generation. This helps to offer
detailed insights from intricate financial datasets which can be employed for decision making. The different
uses of Gen AI now show a fraction of its potential to transform the BFSI sector.
Credit penetration in India
Credit penetration is lower in India compared to other countries
In terms of the credit to GDP ratio, India has low credit penetration compared with other developing
countries, such as China indicating the potential that can be tapped. Similarly, in terms of credit to
households as a proportion of GDP as well, India lags as compared to other markets, with retail credit
hovering at around 26% of GDP as of FY23.
Credit to GDP ratio (%) (Q3 CY2023)
223 230
220
164 179
174 181 178 182 158
153 158
128 151145 152 155 145142
131 124
99 90 92 88
86 86
73 67 67
India China Brazil Germany South United United Thailand Malaysia Chile
Africa Kingdom States
2020 2022 Q3 2023
Note: Data is represented for calendar years for all countries except India. For India, numbers are for fiscal year
Source: Bank of International Settlements, CRISIL MI&A
19
Chandigarh, Delhi, Maharashtra, and Telangana, have a higher banking credit penetration
compared to other states
Delhi, Maharashtra, Telangana, and Chandigarh have a banking credit to GDP ratio of more than 100% as
of March 2023 which indicates that banking credit penetration in the state is higher as compared to other
states in the country. Chandigarh has the highest banking credit penetration of 257% as of March 2023
followed by Delhi at 235%. Maharashtra has the third highest banking credit penetration in Indian States at
164%. Sikkim, Tripura, Himachal Pradesh had the lowest banking credit penetration among all states in
fiscal 2023.
Banking credit penetration across states in India as of FY23
State GSDP Rural Semi-urban Urban

Metropolitan
State/Union (Constant Banking Credit Banking Banking Banking
Banking Credit
Territory Price) (Rs in Penetration Credit Credit Credit
Share
billion) Share Share Share
Chandigarh* 302.9 257% 0% 0% 99% -

Delhi 6,526.5 235% 0% 1% 3% 95%
Maharashtra* 20,279.7 164% 2% 5% 5% 88%
Telangana 7,267.1 107% 9% 11% 8% 72%
Tamil Nadu 14,533.2 91% 11% 23% 14% 51%
Kerala* 5,727.5 85% 4% 50% 46% -
Andhra Pradesh 7,543.4 85% 18% 25% 30% 28%
Karnataka 13,263.2 77% 11% 11% 16% 62%
Haryana 6,084.2 75% 10% 14% 68% 8%
Jammu &
1,347.2 68% 34% 28% 21% 18%
Kashmir-UT
Punjab 4,615.4 68% 19% 28% 26% 27%
Puducherry* 278.3 66% 12% 20% 69% -
Rajasthan 7,994.5 64% 16% 23% 25% 37%
Madhya Pradesh 6,431.2 64% 13% 22% 18% 46%
West Bengal 8,540.2 63% 14% 9% 20% 57%
Others 2,774.0 45% 25% 28% 40% 41%
Note: Credit penetration calculated as banking credit to states as of Fiscal 2023 divided by state GSDP (at constant prices) as of
Fiscal 2023; GDP taken as GSDP at constant prices, Base Year: 2011-12., * GSDP taken for Fiscal 2022; Tier-wise share is taken as
outstanding in the tier divided by total outstanding in the state; Source: RBI, MOSPI, CRISIL MI&A
Rural and semi-urban India – Under penetration and untapped market presents a huge
opportunity for growth of financiers
Bank credit to metropolitan areas has decreased over the past few years with its share decreasing from
66% as of March 31, 2019, to 61% as of September 30, 2023. Between the same period, credit share has
witnessed a marginal rise in rural (7% in FY19 to 8% in H1FY24) and semi-urban areas (12% in FY19 to
20
14% in H1FY24). As of March 31, 2023, rural areas, which accounts for almost 47% of GDP, received just
8% of the overall banking credit, which shows the vast market opportunity for banks and NBFCs to lend in
these areas. With increasing focus of government towards financial inclusion, rising financial awareness,
increasing smartphone and internet penetration, CRISIL MI&A expects delivery of credit services in rural
area to increase. Further, usage of alternative data to underwrite customers will also help the financiers to
assess customers and cater to the informal sections of the society in these regions.
Share of rural & semi-urban regions in banking credit increased between FY19 & 9M FY24
66% 65% 63% 62% 62% 61%
15% 15% 16% 17% 17% 18%

12% 12% 13% 13% 13% 14%
7% 7% 8% 8% 8% 8%
FY19 FY20 FY21 FY22 FY23 9MFY24
Rural Semi Urban Urban Metropolitan
Note: As at the end of each Fiscal and as of December 2023 (9MFY24); Source: RBI, MOSPI, CRISIL MI&A
Rural economy is becoming structurally far more resilient

According to Census 2011, there are about 640,000 villages in India, which are inhabited by about 893
million people, comprising about 65% of the country’s population as of CY2021. The rural economy is far
more resilient today due to increased spends under MNREGA and irrigation programmes, direct benefit
transfer (DBT), the PM-Kisan scheme, PM Ujwala Yojana for cooking gas, PM Awas Yojana for housing,
and Ayushman Bharat scheme for healthcare. To supplement this, there has been a continuous
improvement in rural infrastructure such as electricity and roads. These government initiatives have led to
lesser leakages and higher incomes in the hands of the rural populace, thereby enhancing their ability and
willingness to spend on discretionary products and services. The structural changes, combined with a
positive macro environment, will improve rural business prospects, provide business opportunities for the
banking and financial services sector, and drive the long-term growth of the economy.
21
Overview and Market Landscape of NBFCs in India
Systemic credit to grow at 13-14% CAGR between FY23-FY25
Corporate credit determines the growth in overall credit as it accounts for nearly two-third of systemic credit.
The slowdown in economic activity, coupled with heightened risk aversion among lenders, tightened the
overall credit growth to approximately ~6.3% in FY21. In FY22, the systemic credit growth picked up steam
despite the second wave of COVID-19 hurting economic growth in the first quarter of the fiscal. The retail
credit has been a strong driving force behind the growth in overall credit. Retail credit witnessed a growth
of 10% year on year during FY21 and 14% during FY22, while non-retail credit grew at a slower pace of
3% and 9% during FY21 and FY22. The systemic credit grew at 10.3% in FY22 to reach approximately Rs.
161 trillion. The growth was mainly driven by the budgetary push towards investments, pick-up in private
investment, and business activities. In FY23, Systemic credit showed strong growth on back of pent-up
retail demand from sectors like housing and vehicle and strong credit demand from NBFCs and trade
segment. CRISIL MI&A projects systemic credit to grow at 13-14% CAGR between FY23 and FY25.
Systemic credit to grow by 13-14% between FY23 and FY25
in Rs. tn.
234.11
207.22
181.44
160.85
140.56 136.97 145.56
FY19 FY20 FY21 FY22 FY23 FY24E FY25P

Note: P: Projected; Systemic credit includes domestic banking credit (after deduction of bank lending to NBFC), NBFC credit,
commercial papers, external borrowings, corporate bonds excluding those issued by Banks and NBFC; Source: RBI, Company
reports, CRISIL MI&A
Banking Credit to Real GDP (%)

92.4%
86.6%
81.0%
74.7% 76.6%
66.7% 67.2%
22
Source: RBI, Crisil MI&A
NBFC Credit to Real GDP (%)
26.0%
23.9%
21.8%
20.4% 20.0%
17.1% 18.1%

Source: Crisil MI&A estimates
Share of NBFC credit in overall systemic credit to reach 20% in FY25
9.51% 10.62% 10.29% 9.30% 8.15% 6.97%

16.60%
19.23% 19.14% 18.60% 19.24% 19.90% 20.43%
17.03%
66.4% 71.3% 70.2% 71.1% 71.5% 71.9% 72.6%
Banking Credit NBFC Credit CP,EB,CB
Note: P: Projected; Systemic credit includes domestic banking credit, NBFC credit, commercial papers, external borrowings, corporate
bonds excluding those issued by Banks and NBFC; Source: RBI, Company Reports, CRISIL MI&A
The retail credit (includes Housing finance, Vehicle Financing, Gold Loans, Education Loans, Consumer
Durables, Personal loans, Credit cards and Microfinance) in India stood at Rs. 63 trillion, as of FY23 which
rapidly grew at a CAGR of 14.3% between FY19 and FY23. Retail credit growth in FY20 was around
approximately 12.1% which came down to approximately 9.6% in FY21.
However, post-pandemic, retail credit growth revived back to reach approximately 13.5% in FY22. In FY23,
retail credit has grown at ~22.3% year on year basis. The Indian retail credit market has grown at a strong
pace over the last few years and is expected to further grow at a CAGR of 17-18% between FY23 and
FY25 to reach Rs. 87 trillion by FY25. The moderation of growth of retail credit is on account of normalisation
in unsecured segment which had witnessed exuberant growth in the past and impact of RBI’s risk weight
circular.
23
Retail segment to account for 37% of overall Retail credit growth to continue a strong footing in
systemic credit by FY25 FY24 and FY25
Retail Credit Non- Retail Credit in Rs. tn.

86.8
75.2
63.1
69% 67% 67% 64% 63% 63% 51.6

70% 45.5
41.5
37.0
31% 33% 33% 36% 37% 37%

30%
FY19 FY20 FY21 FY22 FY23 FY24E FY25P FY19 FY20 FY21 FY22 FY23 FY24E FY25P
Note: P = Projected, Source: RBI, CRISIL MI&A
Retail credit mix as of FY23

Microfinance, 6% Consumer Durable,
1%
Gold Loan, 12%
Housing, 46%
Personal Loan, 17%
Auto, 17%
Source: CRISIL MI&A
Systemic non-retail credit expected to grow at 13-14% CAGR between FY23 and FY25
in Rs. tn.
148
130
115
103
87 92 94

Note: P = Projected; Source: RBI, CRISIL MI&A
NBFC Credit to grow faster than systemic credit

Over the past decade, banking credit growth lagged systemic credit growth for several years as NBFCs
grew at a much faster pace. NBFCs clocked 15% CAGR in credit, between fiscals 2016 and 2018, mainly
24
due to aggressive expansion of their footprint and entry of numerous new players across India. This also
coincided with a decline in bank credit growth.
However, the NBFC sector faced headwinds after the IL&FS default in September 2018, followed by a
liquidity crisis. Later, funding challenges and the Covid-19 pandemic added to the pressures, curbing
growth. Banks benefitted in this milieu and used their surplus liquidity to gain market share in terms of credit
in a few key segments.
During fiscals 2019 to 2024, NBFC credit is estimated to have witnessed a growth at CAGR ~11%, while
NBFC retail credit is estimated to have grown at ~14% CAGR over the same time-period. NBFCs have
shown remarkable resilience and gained importance in the financial sector ecosystem, growing from less
than Rs 2 trillion AUM at the turn of the century to Rs. 41 trillion at the end of Fiscal 2024.
Going forward, CRISIL MI&A expects NBFC credit to grow at 16-18% in Fiscal 2025, along with rapid
revival in the economy. Further growth of the NBFC industry will be driven mainly by large players with
strong parentage who have a funding advantage and capability to invest and expand into newer
geographies.
NBFC credit to grow at CAGR 16-18% between FY23 and FY25

in Rs. tn.
47.8
41.2
34.9
27.9 29.9
23.9 26.3

Note: P = Projected; Source: RBI, Company reports, CRISIL MI&A, note: HDFC is not considered while calculating overall NBFC
Credit
CRISIL MI&A believes that NBFCs will remain a force to reckon within the Indian credit landscape, given
their inherent strength of providing last-mile funding and catering to customer segments that are less in
focus by the Banks.
NBFCs play a vital role in financial inclusion in India
Financing needs in India have risen in sync with the notable economic growth over the past decade. NBFCs
have played a major role in meeting this need, complementing banks and other financial institutions. NBFCs
help fill gaps in the availability of financial services with respect to products as well as customer and
geographic segments. A strong linkage at the grassroots level makes them a critical cog in the financial
machine. They cater to the unbanked and underbanked masses in rural and semi-urban India and lend to
the informal sector and people without credit histories, thereby enabling the government and regulators to
realize the mission of financial inclusion.
25
Share of retail credit in total NBFC credit to grow to 48% by end of FY24 and expected to
remain stable in FY25
57% 57% 57% 55% 53% 52% 52%
43% 43% 43% 45% 47% 48% 48%
NBFC Retail NBFC Non Retail
Note: P = Projected; Retail credit includes housing finance, vehicle finance, microfinance, gold loans, construction equipment finance,
consumer durable finance, MSME loans and education loans; Source: Company reports, CRISIL MI&A
Retail segment to support NBFCs overall credit growth
The NBFC sector has, over the years, evolved considerably in terms of size, operations, technological
sophistication, and entry into newer areas of financial services and products. The number of NBFCs as well
as the size of the sector have grown significantly, with a number of players with heterogeneous business
models starting operations. Overall NBFC credit during FY19 to FY23, witnessed a CAGR of ~10% which
was majorly led by retail segment which accounts for ~47% of overall NBFC credit and witnessed a CAGR
of ~13%, while NBFC non-retail credit witnessed a growth of ~8% during the fiscals.
Going forward, growth in the NBFC retail segment is expected at 18-19% CAGR between FY23-FY25 which
will support overall NBFC credit growth, with continued focus on the retail segment and multiple players
announcing plans to reduce wholesale exposure, the retail segment’s market share is expected to rise
further to 48% (vs the wholesale’s 52%) by end of FY24 and remain stable in FY25.
Growth in retail credit for banks and NBFCs

in Rs. tn.
64
55
47
23 27
16 20
10
NBFC Retail Bank Retail

FY19 FY23 FY24E FY25P
Note: P = Projected; Retail credit above includes housing finance, vehicle finance, microfinance, gold loans, construction equipment
finance, consumer durable finance, MSME loans and education loans; Source: Company reports, RBI, CRISIL MI&A
Housing finance accounts for third highest share in overall NBFC credit as of FY23
As of FY23 infrastructure financing accounts for the highest share in NBFC credit (25%), which was followed
by MSME loans which account for 20% share of overall NBFC credit. Housing finance accounted for third
26
highest share in overall NBFC credit outstanding with 17% share in overall NBFC credit.
Distribution of NBFC Credit across asset classes
1% 1% 1% 1% 2% 2% 2% 3%
4% 3% 3% 2% 3% 3% 2% 2%
28% 29% 27% 25% 24% 23% 23%

29%
4% 3% 3%
7% 5%
9% 9% 8%
21% 23% 23%
19% 20%
16% 17% 18%
3% 4% 4% 5% 6% 7% 7% 8%
2% 3% 3% 3% 4% 4% 5% 5%
3% 3% 4% 4% 4% 4%
15% 4% 3%
15% 14% 14% 14% 14% 14% 15%
19% 17% 17% 18% 17% 16% 16% 16%
FY19 FY20 FY21 FY22 FY23 FY24P FY25P FY26P
Housing Vehicle Gold Microfinancing Personal loan

MSME Wholesale Infrastructure Constr. Equip Others
Note: Others include education loan and consumer durable loans, Infrastructure includes PFC & REC
Source: Company reports, CRISIL MI&A
Housing finance accounted for the highest share in NBFC retail credit
6% 9% 9% 11%
6% 14% 15% 16% 17%
7% 7% 8%
7% 9%
8% 10% 9% 10% 10%
10%
9% 8% 8% 7%
35%
35% 34% 32% 31% 32% 31% 31%
45% 41% 41% 40% 38% 36% 35% 34%
FY19 FY20 FY21 FY22 FY23 FY24P FY25P FY26P
Housing Finance Vehicle Finance Gold Loans Microfinance Personal loan
Housing finance accounted for the highest share in NBFC retail credit across fiscals accounting for 38% as
of FY23, witnessing a fall in share from 45% in FY19. This was followed by vehicle financing and personal
loans with 32% and 15% share in FY23 respectively. Top 3 asset classes accounted for ~83% of total
NBFC retail credit.
Housing finance has the lowest GNPAs and second lowest credit costs across asset
27
classes for NBFCs
Across asset classes, housing finance is one of the safest asset classes with lowest GNPA (%) across
segments at 1.6% for FY23, and second lowest credit costs after gold loans (0.1%) at 0.5% for FY23. While
MFI loans had the highest interest income across asset classes and return on assets was highest in gold
loans at 4.7% for FY23.
ROA Tree for NBFCs across asset classes

Asset Class Financial Metric FY22 FY23 FY24E and FY25P
Interest income to average assets 8.7% 9.2% 9.5-9.7%
Interest expense to average assets 5.7% 5.9% 6.2-6.4%
Credit Cost 0.6% 0.5% 0.3-0.5%
Housing Loans
Opex 0.9% 0.9% 0.8-1.0%
ROA 1.5% 1.9% 1.9-2.1%
GNPA 2.1% 1.6% 1.1-1.2%
Interest income to average assets 14.5% 15.5% 15.5-16%
Credit Cost 1.2% 1.3% 1.3-1.5%
MSME Loans
Opex 4.2% 3.6% 3.4-3.6%
ROA 3.3% 3.7% 3.6-3.9%
GNPA 3.1% 2.6% 2.4-2.7%
Credit Cost 2.5% 1.8% 1.6-1.8%
Auto Loans
Opex 1.6% 2.5% 2.0-2.2%
ROA 1.9% 2.3% 2.4-2.6%
GNPA 6.6% 5.0% 4-4.5%
Interest income to average assets 16.4% 14.9% 15-17%
Credit Cost 0.1% 0.1% 0.2-0.3%
Gold Loans
Opex 5.1% 4.9% 4.9-5.1%
ROA 5.6% 4.7% 5.4-5.6%
GNPA 2.8% 3.0% 2.5-2.7%
Credit Cost 0.7% 0.4% 0.2-0.4%
Affordable Housing Loans
Opex 1.5% 1.7% 1.7-1.9%
ROA 2.3% 2.8% 2.8-3.0%
GNPA 3.0% 2.0% 1.5-1.7%
MFI Loans Interest income to average assets 15.8% 17.3% 17.8-18%
28
Credit Cost 2.9% 2.4% 1.7-1.9%
Opex 4.6% 4.8% 4.4-4.6%
ROA 1.2% 2.9% 4-4.2%
GNPA 6.0% 2.9% 1.8-2%
Source: CRISIL MI&A, Company Documents, Note: Ratios on average total assets
29
Housing Scenario in India
The Housing sector is regarded as the engine of economic growth and can give a big push to the economy
through its forward and backward linkages with more than 250 ancillary industries. The sector’s strong inter-
industry linkages and investments can have multiplier effects on generation of income and employment in
the country. Recognising the importance of housing as a basic human need, the government has
announced multiple schemes to continue their focus on housing in the country.
Indian household investment in Real estate

In a country like India,real estate is one of the largest investments for a majority of people in their lifetime
and holds significant importance. As a consequence of India’s large population, having a decent house is
a dream many spend their lives trying to fulfil. As per the household finance committee report issued by the
RBI in 2017, the average Indian household holds 77% of its total asset in real estate which includes
residential buildings, buildings used for farm and non-farm activities, constructions such as recreational
facilities, and rural and urban land.
As per 2011 census, India has ~331 million houses of which only 130 million houses were
in good habitable condition
As per 2011 census, India has 330.84 million houses of which 244.64 million houses were used for
residence purpose or residence-cum-other use purpose. Further, 130.12 million houses amongst the
occupied ones were classfied as ‘good habitable condition’, followed by 101.44 million (41.46%) as ‘liveable
habitable condition’ and remaining as ‘dilapidated habitable condition’.
Average Household size as per 2011 census stood at 4.9 persons per household (in
millions)
As per 2011 census, total number of households in India stood at 246.69 million, with rural and urban
regions accounting for 68% and 32% share respectively. The average household size in India stood at 4.9
persons per household. Average household size in rural and urban regions stood at 4.9 and 4.8 persons
respectively.
Average Household size in urban regions stood at 4.8 persons per household and 4.9 persons per
household in rural regions
Characteristics
Total Rural Urban
Total Population 1210.1 833.0 377.1
Total Households 246.6 167.8 78.8
Average Household size 4.9 4.9 4.8

Source: Census 2011, State of Housing in India 2013, CRISIL MI&A
30
As per 2011 census, out of total households (246.69mn.) in India, 4% have no exclusive rooms, 37% have
only one room, 32% have two rooms, 14% have three rooms and 13% have four rooms and above. One
room household dominate the share of overall households in both rural and urban regions.
Households by number of dwelling rooms (in millions)
Distribution of Households having number of dwelling rooms
Number of
Area
Households No Exclusive One Room Two Rooms Three Rooms Four Rooms
Room & Above
Rural 167.83 7.21 66.15 53.99 21.31 19.16
Urban 78.86 2.43 25.34 24.14 14.49 12.47
India 246.69 9.64 91.49 78.13 35.8 31.63
Source: Census 2011, State of Housing in India 2013, CRISIL MI&A
Housing shortage in India (in millions)

Distribution of Occupied Census Houses
Total Number
Occupied Residence Residence cum Total of Residence and All other Non-
Area of Census
Census House other use Residence cum other Residential Use
Homes
use
Rural 220.70 207.12 159.93 6.23 166.16 40.96
Urban 110.14 99.04 76.13 2.35 78.48 20.56
Total 330.84 306.16 236.06 8.58 244.64 61.52
*Other non- residential use – Shop, Office, School, College, Hotel, lodge, guest house, hospital dispensary, Factory, workshop, work
shed, place of worship, etc; Source: Census 2011, Ministry of Housing and Urban Poverty Alleviation National Buildings
Organisation; Planning Commission, CRISIL MI&A
Housing shortage in India
Despite the constant focus on the housing segment, housing in India is far from adequate. The shortage of
overall houses (rural & urban regions) is at a very high level at 62.5 million houses (as per twelfth five-year
plan 2012-17) due to changing social and demographic pattern in India such as nuclearization of families
and rapid growth of urbanisation.
Housing shortage split between urban-rural (2012) – (in million)

21 20.21
Households living in congested houses
18 requiring new house
14.99
15 Households in Homeless conditions
11.3
12
Households living in non-serviceable
9 7.47 Katcha
6 4.15 Households living in obsolescent
2.27 houses
3 0.53 0.99 0.55 Additional housing shortage between
0 2012-17
Urban Rural
Source: 2012 Estimates, Ministry of Rural development, Planning commission, CRISIL MI&A
31
In its Twelfth Five Year Plan (2012-2017), the Government accorded this issue utmost importance and
focused on increasing the amount of housing units available both in the urban as well as the rural sector.
As per the estimates of the Twelfth Five Year Plan, the shortage of housing in the urban segment of the
society stood at 18.78 million. The economically weaker section (EWS) accounts for ~56% of the shortage.
Lower Income Group (LIG) approximately accounts for ~39% of housing shortage in urban regions.
Urban Housing shortage split among Socio-Economic Group (2012) – million

Category Urban Housing Shortage (in %)
EWS 10.55 56.2%
LIG 7.41 39.5%
MIG & HIG 0.82 4.3%
Total 18.78 100%
Note: 2012 Estimates; Source: Ministry of Rural development, Ministry of Housing and Urban Poverty Alleviation National Buildings
Organisation; Planning Commission, CRISIL MI&A
The erstwhile Planning Commission and Ministry of Rural Development, Government of India, has taken
official initiative to assess the quantum of housing shortage in rural India. As per the estimates of the Twelfth
Five Year Plan, in 2012 the shortage of housing in the rural segment of society stood at 43.13 million.
76% of total urban housing shortage is contributed by top 10 states (2012)

As per the estimates of the Twelfth Five Year Plan, 10 states accounted for ~76% of the urban housing
shortage. Uttar Pradesh has a housing shortage of over 3 million, followed by Maharashtra (1.94 million),
West Bengal (1.33 million), Andhra Pradesh (1.27 million) and Tamil Nadu (1.25 million).
State-wise housing shortage
(In Mn)
~76% of the total urban housing shortage is
3.5 3.1 contributed by 10 states
3.0
2.5 1.9
2.0 1.3 1.3 1.3 1.2 1.2
1.5 1.1 1.0 1.0
1.0 0.6 0.5 0.5 0.4 0.4 0.4 0.4 0.3 0.2 0.2
0.5
0.0
Jharkhand
Odisha
Pradesh
Pradesh
Assam
West Bengal
Haryana
Punjab
Chhattisgarh
Tamil Nadu
Kerala
Uttarakhand
Uttar Pradesh
Bihar
Rajasthan
Gujarat
Delhi
Karnataka
Maharashtra
Nagaland
Madhya
Andhra
Source: Report of the Technical Urban Group on Urban Housing Shortage (TG-12), CRISIL MI&A
32
Amongst the top states with high shortage of homes, some states such as Uttar Pradesh, Bihar, West
Bengal, Rajasthan & Madhya Pradesh have a lower per capita income, as compared to the national
average. This shows that there is significant headroom for growth in terms of increasing per capita income
and reducing the housing shortage in the country.
45% of the India’s States have a lower per capita income than national average (fiscal 2023)
India average: Rs. 100,500

298,527
133,356
126,587
263,477
256,507
71,624
179,367
168,050
161,564
160,321
158,561
154,427
150,454
146,047
143,816
141,830
Chandigarh
Sikkim
Goa
Puducherry
Andhra Pradesh
Kerela
Himachal
Others
Haryana
Tamil Nadu
Delhi
Telangana
Gujarat
Uttarakhand
Maharashtra
Nicobar Islands
Pradesh
Andaman &
Source: RBI CRISIL MI&A
Estimated shortage and requirement of ~100 million houses in 2022

The housing shortage in India has only increased since the estimates at the time of the Twelfth Five-year
plan. As per the report of RBI-appointed Committee on the Development of housing finance securitisation
market (September 2019), the housing shortage in India was estimated to increase to 100 million units by
2022. Majority of the household shortage is for Lower income group (LIG) and Economic weaker section
(EWS) with a small proportion (5-7%) of the shortage coming from middle income group or above. Total
incremental housing loans demand, if this entire shortage is to be addressed, is estimated to be in the
region of Rs 50 trillion to Rs 60 trillion, as per the Committee report. In comparison, the overall housing
loans outstanding (excluding PMAY loans) as of March 2023 is around Rs 28.7 trillion. This indicates the
immense latent potential of the market; in case a concrete action is taken for addressing the shortage of
houses in the country.
Housing Shortage in India

150
100
in millions
100
50 24.7 18.7
0
2007 2012 2022E
Note: E: Estimated; Source: RBI, Planning Commission, CRISIL MI&A
India’s mortgage penetration is lower than other economies
33
India has very low penetration in terms of housing finance as compared to its rising peers which shows a
high potential for expansion of Indian housing finance companies. The Housing finance market continues
to face supply constraints from Banks and NBFCs, particularly for the lower income.
Mortgage-to-GDP ratio in India (FY23) compared with other countries (CY18)
60.0% 64.0%
45.7%
35.4%
28.0%
21.4%
9.4%
India South Africa* China* Malaysia Europe USA UK
Note: (*) – As of CY17, Indian mortgage to GDP is for Fiscal 2023 – 12.3%; Europe 28 includes the 28 European Union Member
states as of December 2018; Source: HOFINET, European Mortgage Federation, NHB, CRISIL MI&A
State-wise mortgage penetration in India
The mortgage-to-GDP ratio varies widely based on home loan market size, ranges between ~4% and
~42% in fiscal 2023. Chandigarh has the highest housing loan penetration with ~41% of GDP followed by
Maharashtra (~32%) and Telangana (~32%) at second and third position respectively in fiscal 2023.
41%
32% 32%
24%
20% 18% 18% 17% 17% 16% 16% 15% 14% 14% 13%
9%
Kerala
Tamil Nadu
Gujarat*
Karnataka
Delhi
Andaman &
Others
Chandigarh*
Telangana
Haryana
Goa*
Rajasthan
Maharashtra
Pradesh
Pradesh
Pradesh
Madhya
Andhra
Uttar
Islands*
Nicobar
*
Note: Housing loan penetration calculated as Housing loan outstanding over state GSDP (at constant prices) as of Fiscal 2023; GDP
taken as GSDP at constant prices, Base Year: 2011-12., * GDSP taken for Fiscal 2022, Source: CIBIL, RBI, MOSPI, CRISIL MI&A
India GDP per capita in PPP (in ‘000 USD) has increased to 8.4 in 2022 from 6.6 in 2018
8.4
6.6 6.9 7.4
6.5
2018 2019 2020 2021 2022

Source: World Bank, CRISIL MI&A
Mortgage-to-GDP ratio in India to grow to 14-15% by fiscal 2025

In fiscal 2023, India's mortgage-to-GDP ratio stood at 12.3%. Though low compared with other developing
countries, it has significantly improved from 6.5% in fiscal 2009. The factors that contributed to the
34
improvement are rising incomes, improving affordability, growing urbanisation and nuclearization of
families, emergence of tier-II and tier-III cities, ease of financing, tax incentives, and widening reach of
financiers. Given the expected steady growth from fiscal 2023, CRISIL MI&A projects the ratio at 14-15%
by fiscal 2025.
Trend in mortgage-to-GDP ratio in India
14-15%
12.3%
10.8% 11.3%
9.1%
8.1%
FY19 FY20 FY21 FY22 FY23 FY25P
Note: P – Projected, Data for mortgage to GDP for India includes both Housing loans outstanding over constant GDP for India;
Source – NHB, World Bank, CRISIL MI&A
Factors affecting mortgage-to-GDP ratio in India
Mortgage penetration in India is far lower than other emerging economies (South Africa, China, Malaysia
etc.) owing to lower per capita income and higher proportion of informal employment in the country.
However, CRISIL MI&A believes rising urbanisation, growing disposable income, favourable demographics
and government measures will lead to higher mortgage penetration going forward.
1- Higher affordability led by increase in 1- Low per capita GDP

disposable income 2- Relatively high house prices
2- Rapid growth in urbansisation 3- High percentage of population in
3- Higher proportion of young informal employement
population 4- Information asymmetry in smaller
4- Government measures to push cities
housing sector such as "Housing for 5- Insufficient long-term capital
all", impetus packages to tackle the
pandemic, NHB Refinance scheme, 6- Inadequate legal infrastructure
SARFAESI Act, etc.
5 - Formalization of credit
Source: CRISIL MI&A
Rise in per capita income to drive the growth of mortgage penetration in India
The mortgage penetration in China is correlated to the GDP per capita of the country and the mortgage to
GDP ratio of China has grown from 12% in 2008 to 28% in 2017. The per capita income of the country has
increased from USD 7,500 in 2008 to USD 14,300 in 2017. India has gone through a similar trajectory with
mortgage penetration in the country increasing from 6% in 2008 to 9% in 2017 which is correlated to the
35
increase in per capita income of the country from USD 3,500 in 2008 to USD 6,200 in 2017. India’s GDP
per capita income stood at USD 8,400 at end of 2022 witnessing significant growth in the past five fiscals.
30% 20.0
28%
25%
13.0 13.5 23% 14.3 15.0
12.0 12.6
20% 11.2
10.2 18%
9.2 16% 17%
15% 7.5 8.2 15% 14% 14% 10.0
12% 12% 5.5 5.8 6.2
10% 4.5 4.9 5.1 5.2
3.5 3.8 4.2
5.0
5% 9%
7% 6% 7% 7% 8% 7%
6% 6% 6%
0% 0.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
China GDP per capita in PPP terms (In '000 USD) India GDP per capita in PPP terms (In '000 USD)
China Mortgage to GDP (%) India Mortgage to GDP (%)
Source – HOFINET, Peoples Bank of China, World Bank, CRISIL MI&A
Positive customer sentiments, along with rising supply of premium housing projects
helped in housing sales revival post pandemic
During fiscals 2021-23, new launches were lower than incremental demand, the overall unsold inventory
level continued to decline sequentially. Developers were restricting new launches during Covid year (FY21)
and were cautious even during FY22. In post-pandemic environment where hybrid mode of work is
established, consumer preferences have pivoted towards larger and bigger configurations in premium
housing projects. In sync with this trend, large established developers have also gradually aligned their new
launches to premium projects.
Among top residential markets, during FY19 maximum number of new projects were launched in Mumbai
Metropolitan Region (MMR) with 71 new projects, followed by Hyderabad with 46 launches and Pune with
31 new launches. In fiscal 2023, the highest number of launches happened in MMR with 73 new launches,
followed by Hyderabad with 66 and Bengaluru with 48.
In fiscal 2023, Hyderabad had the highest proportion of unsold inventory to total inventory at 81% followed
by MMR at 80%. From fiscal 2019 to 2023, NCR region witnessed the highest fall in unsold to new inventory
proportion (32%) followed by Bengaluru (11%). Proportion of unsold inventory increased in Ahmedabad
from 47% in fiscal 2019 to 64% fiscal 2023.
Top residential markets witnessed strong momentum in the past few fiscals supported by sustained
economic growth and continuation of hybrid working models, growth is expected to continue in FY25
primarily due to necessity for larger living spaces and an enhanced lifestyle, catalysed by the pandemic.
New launches highest in MMR followed by Hyderabad and Pune in FY19
FY19 Bengaluru Hyderabad Kolkata Pune MMR NCR Chennai Ahmedabad Kochi Chandigarh
New Launches 27 46 9 31 71 25 14 5 4 6
Total Inventory 128 160 76 129 344 160 49 32 10 11
36
Demand 37 21 24 30 48 32 16 17 4 2
Unsold
91 140 52 99 296 128 33 15 6 9
inventory
Unsold
Inventory as %
71% 87% 68% 77% 86% 80% 67% 47% 59% 82%
of total
inventory
Source: Company reports, CRISIL MI&A Estimates
New launches highest in MMR followed by Hyderabad and Bengaluru in FY23
FY23 Bengaluru Hyderabad Kolkata Pune MMR NCR Chennai Ahmedabad Kochi Chandigarh
New Launches 48 66 9 38 73 11 12 18 2 5
Total Inventory 115 243 44 117 300 92 39 33 6 26
Demand 46 47 15 37 60 49 15 12 2 2
Unsold
69 196 30 80 240 44 24 21 4 24
inventory
Unsold
Inventory as %
60% 81% 67% 68% 80% 47% 63% 63% 66% 94%
of total
inventory
Highest new launches expected in MMR followed by Hyderabad and Bengaluru in FY25
FY25P Bengaluru Hyderabad Kolkata Pune MMR NCR Chennai Ahmedabad Kochi Chandigarh
Launches 64 68 12 46 86 48 19 25 4 5
Total Inventory 128 293 36 121 345 62 43 54 8 32
Demand 68 62 16 44 62 52 17 16 2 2
Unsold
60 231 20 77 283 10 26 38 6 31
inventory
Unsold
Inventory as %
47% 79% 55% 64% 82% 16% 61% 70% 75% 94%
of total
inventory
Favourable Demographic
Shift towards younger age profile for home loan borrowings
As per United Nations DESA estimates, as of July 2023, India has one of the largest young populations in
the world, with a median age of 28.2 years. As of CY2021, 64% of India’s population was between 15 and
59 years, with 26% of the nation’s population under the age of 14. In comparison, in 2020, the United States
(US), China and Brazil had 74%, 62% and 78%, respectively, of their population below the age of 60.
37
India’s demographic dividend
7% 8% 10% 11%
31% 34% 37% 39%
27% 28%
27% 26%
35% 31% 26% 24%
CY2001 CY2011 CY2021 CY2025P

Age 0-14 Age 15-29 Age 30-59 Age 60+
Note: E: Estimated, P: Projected; Source: United Nations Department of Economic and Social affairs, CRISIL MI&A
Average age of borrowers has been declining over the years and was estimated at 33 years in fiscal 2020.
We expect this figure to decline further with growth in salaries and people's strengthening preference for
accumulating assets, both for investment purpose and tax benefits, coupled with increased access to formal
credit India’s demographic profile is expected to favour the Housing industry, leading to growth in the
Housing Finance market.
Declining age of borrowers
Average age of borrowers
35
33
30
FY15E FY20E FY25P
Note: E – Estimated, P – Projected, Source: CRISIL MI&A
Continuous increase in share of urban population to boost demand for housing in urban
areas
The share of urban population in relation to the total population has been consistently rising over the years.
People from rural areas move to cities for better job opportunities, education, better life, etc. Entire families
or only a few people (generally earning member or students) may migrate, while a part of the family
continues to hold on to the native house. The urban population of India was at 508 million in 2022,
witnessing a CAGR of 2.4% from 2011; rural population was 908 million witnessing a CAGR of 0.46% from
2011, Urbanisation levels rose from 31% in 2011 to 36% in 2022. This percentage is expected to increase
further in the years to come, thereby translating into higher demand for housing and related amenities in
the urban areas.
Urban population as a percentage of total population
38
38-40%
35% 36%
28% 31%
23% 26%
18%
11% 11% 14%
1901 1921 1941 1961 1981 1991 2001 2011 2021 2022 2031P
Note: P: Projected; Source: United Nations Population Division’s world urbanization prospects, World Bank, CRISIL MI&A
Rise in number of nuclear families leads to formation of new houses

Nuclearization refers to formation of multiple single families out of one large joint family. Each family lives
in a separate house, while the ancestral house may be retained or partitioned to buy new houses.
Nuclearization in urban areas is primarily driven by changing lifestyle of people, individualism, changing
social/cultural attitudes, and increased mobility of labour in search of better employment opportunities.
These trends are expected to continue in future.
Trend in average household size
5.5
5.3
4.9
1991 2001 2011
Source: Census 2011, CRISIL MI&A
Furthermore, according to the Census 2011, majority of the Indian households live in a one-room or two-
room house. According to the NSSO Survey on Housing Conditions conducted in 2012, the average floor
area of a dwelling unit was 40.03 sq. m in rural India and 39.20 sq. m in urban India during 2012.
State-wise average household size
5.9 5.6 5.5 5.4

5.4 5.3 5.2 5.2 5.1 5.1 5.1 5.0 5.0 5.0
4.9 4.9 4.9 4.7 4.7 4.7 4.7 4.6 4.5 4.5
4.4 4.3 4.3 4.1 4.0
Jammu &…
Himachal…
Andhra…
Madhya…
Arunachal…
Punjab
Manipur
Sikkim
Karnataka
Kerala
Tripura
Goa
Tamil Nadu
Meghalaya
Haryana
Mizoram
Assam
Chhattisgarh
Rajasthan
Gujarat
Uttarakhand
Maharashtra
Odisha
Bihar
Jharkhand
Nagaland
West Bengal
Uttar Pradesh
NCT of Delhi
Source: NSSO (National Sample Survey Organisation), CRISIL MI&A
Rising demand for independent houses
39
Indians traditionally prefer to live in independent houses. The Census Data 2011 also clearly shows that
Indians prefer independent housing. However, the increase in population density, especially in urban areas,
has increased the demand for flats. This is expected to continue to drive the demand for such homes, which
are often self-constructed, especially in the smaller cities.
Infrastructure development to boost demand for Real Estate
Government of India has increased its focus towards infrastructural development, which can be seen
through the rising allocation towards infrastructural development in the Union budget. The real estate
market is impacted by infrastructure growth. Development of new infrastructure such as roads, bridges,
airports, smart cities etc., opens up new areas for development and increases the value of existing
properties. It also attracts businesses and population growth to an area, which boosts the local economy
and supports the real estate market.
Higher affordability
CRISIL forecasts that the per capita income will gradually improve with a pick-up in GDP growth and
sustained low inflation. This is expected to be an enabler for domestic consumption leading to rise in
demand for housing. Further, increase in household savings over the last decade coupled with availability
of underwriting and providing credit to the vulnerable or informal segment owing to advancement in
technology has also led to higher demand for housing.
Real estate prices are relatively higher though affordability has only improved historically
in Rs.
8,000 10.7 12.0
9.6
8.3 8.3 8.0
6,000
8.0
4,000
4.0
5,600
5,650
5,550
6,150
6,765
848
737
670
589
521
2,000
- -
FY19 FY20 FY21 FY22 FY23
Average price per sqft Annual Income (in Thousands) Affordability
Note: The charts indicate the price per sqft based on top 10 markets -Delhi NCR, Mumbai, Pune, Ahmedabad, Chennai, Kolkata,
Bangalore, Chandigarh, Hyderabad, and Kochi, at a Pan India level, the overall prices could be way lower than estimates,
Affordability is computed as average price per sqft / annual income; Source: CRISIL MI&A
Regulatory Initiatives in the Housing Finance segment
• Regulatory Authority on HFCs shifted from NHB to the RBI

The Union Budget 2019-20 announced the transfer of regulatory power on housing finance companies
(HFCs) from National Housing Bank (NHB) to the Reserve Bank of India (RBI). This has resulted in
streamlined regulations and implementation as well as better risk management framework for HFCs. The
40
RBI Act was amended to give the central bank powers to regulate HFCs. This move was expected to ensure
there is greater parity in regulations for NBFCs and HFCs.
• PSL eligibility increased in Housing
The RBI has increased (under the notification released in June 2018) eligibility for priority sector lending
(PSL) in housing loans with a view to converge PSL guidelines with Pradhan Mantri Awas Yojana (PMAY).
The eligibility has been increased from Rs 2.8 million to Rs 3.5 million for metropolitan centers and from Rs
2 million to Rs 2.5 million for other centers. The cost of dwelling units has been capped at Rs 4.5 million in
metropolitan centers and at Rs 3 million in other centers. The on-lending limits given to NBFC/HFCs from
Banks was also raised from Rs. 1 million to Rs. 2 million.
Under the eligibility criteria prescribed by the National Housing Bank under The Refinance Scheme under
Affordable Housing Fund for the Financial Year 2021-22 (“Refinance Scheme”) read with paragraph 12.1(i)
of the Master Directions – Reserve Bank of India (Priority Sector Lending – Targets and Classification)
Directions, 2020 (“PSL Master Directions”), individual housing loans with a ticket size lower than ₹2.5 million
in non-metropolitan areas are considered as affordable housing loans. Furthermore, paragraph 12.1(i) of
the PSL Master Directions sets out that loans up to ₹3.5 million to individuals in metropolitan centres (with
population of one million and above); and up to ₹2.5 million to individuals in other centers, for the purchase
or construction of a dwelling unit, per family, will be eligible for priority sector classification, provided the
overall cost of the dwelling unit in the metropolitan centre and at other centres does not exceed ₹4.5 million
and ₹3.0 million, respectively.
• NHB’s Refinance to aid borrowing cost for HFCs catering to Affordable housing
While access to the debt markets allows large HFCs to mobilize resources at competitive rates, niche HFCs
have benefited from the NHB’s refinance schemes. The NHB runs various schemes under which it
refinances banks and HFCs. This funding is available to affordable housing players at a very low rate, but
it comes with an interest rate capping. It leads to improvement in borrowing cost but at the same time
reduces the yield too, while keeping the spread at similar levels.
• Securitisation and reconstruction of financial assets and enforcement of security and

interest (SARFAESI) Act 2002
HFCs registered under the NHB Act with assets above Rs. 1 billion were bought under the ambit of
SARFAESI act which has helped them accelerate recoveries.
• Implementation of the Real Estate (Regulation and Development) Act (RERA)
Implementation of the Real Estate (Regulation and Development) Act (RERA) in 2017 had a direct impact
on the supply-demand dynamics in the sector. RERA is expected to improve transparency, timely
41
delivery, and organized operations over time. It does not permit developers to launch new projects before
registering them with the real estate authority.
This is a major shift from the practices followed earlier by developers, wherein they managed to sell part
of the project through soft/pre-launch activities. RERA puts an end to fund diversion across projects as it
mandates 70% of the funds collected from customers for a specific project should be maintained in a
separate escrow account and used only for the same project. Besides, developers have to disclose
project-related information, such as project plan, layout, government approvals, carpet area of units,
construction status and delivery schedule.
• Framework of RERA
Transparency:
- Compulsory registration of all ongoing and upcoming real estate projects; existing under-
construction projects which have not received completion certificates is covered under the Act.
Developers to disclose project-related details including project plan, layout, and government
approvals to the customers. The details include sanctioned FSI, number of buildings and wings,
number of floors in each building, etc.
- Buyers to pay only for the carpet area.
- Consent of two-third allottees to be taken for any major addition or alteration.
Liability:
- Any structural defect, or any other obligations of the promoter as per the agreement for sale,
brought to notice of promoter within five years from possession to be rectified free of cost.
- No false statements or exaggerated commitments to be given in advertisements.
- Buyers have to comply with payment schedule mentioned in model sale agreement (which
mandates them to pay up to 30% of total consideration on execution of agreement, an additional
up to 15% of total consideration on completion of plinth work; and remaining payment as per
clauses mentioned in the model sale agreements).
Security:
- 70% of the money received from buyers for a particular project to be transferred to an escrow
account.
- Withdrawals to be in accordance with project completion and need to be certified by engineer,
architect, and a practicing-chartered accountant.
Discipline:
- Developers have to register their projects with the RERA before advertising or marketing.
- Brokers/ agents to be registered with RERA.
42
- Project details to be updated quarterly on RERA website.
- Project accounts to be audited annually by a CA.
Compliance:
- In case of delay, developers have to pay interest to home buyers at State Bank of India’s highest
marginal cost of lending rate plus 2%.
- Developer may terminate the agreement in case of three payment defaults by buyers (by giving 15
days’ notice).
- Monetary fines/ penalties for not registering the projects and continuous default/ non-compliance
with any provision of the Act/ non-compliance with the order of Appellate Tribunal (does not mention
imprisonment penalties to developers).
Justice:
- The complaint at the initial stage will be handled by the authority, with further appeal resting with
the RERA Appellate Tribunal. A second appeal is also allowed to be filed before a High Court
43
Overview of Housing Finance Market of India
Housing finance market in India to log a CAGR of 13-15% from fiscal 2023 to 2027
The Indian housing finance market clocked a healthy ~12.6% CAGR (growth in credit outstanding) during
fiscals 2019 -2023, on account of rise in disposable incomes, healthy demand, and greater number of
players entering the segment. Over the past two fiscals, housing finance segment has seen favourable
affordability on account of stable property rates and improved annual income of individual borrowers. The
overall housing finance segment credit outstanding is ~Rs. 28.7 trillion as of FY23, which increased during
fiscal 2023, the overall housing market grew 16.7%, led by the aspirations of a growing young population
with rising disposable income migrating to metro cities and elevated demand in Tier 2 and 3 cities as well.
Demand for home loans remained largely unscathed despite a sudden rise in repo rates. Moreover, the
income of the salaried class remained largely intact despite the economic slowdown caused by the Covid-
19 pandemic and rise in inflation, thereby allaying lenders' concerns about any deterioration in asset quality.
Going forward, Crisil MI&A expects overall housing segment to grow at a CAGR of 13-15% from FY23-27.
The Government of India has been pursuing various social welfare schemes and initiatives to enhance the
flow of credit to the housing sector and increase home ownership in India.
Housing finance outstanding witnessed a CAGR of 12.6% CAGR from FY19-23
in Rs. Tn. 48.5
28.7 31.5
21.7 24.6
17.9 19.4
FY19 FY20 FY21 FY22 FY23 9M FY24 FY27P
Source: CRIF Highmark, CRISIL MI&A
Prime housing finance segment witnessed the fastest growth in housing finance from
FY19-23
Among major ticket-size brackets, Prime housing segment (Loans above Rs. 5.0 million) witnessed the
fastest growth from FY19-23, growing at a CAGR of 19.5% which was followed by loans in the mass market
housing segment (loans between Rs. 2.5 to 5.0 million) which grew at a CAGR of 15.9% and affordable
housing (loans less than Rs. 2.5 million) growing at a rather slow pace of 5.6% during the fiscals.
Market share for ticket brackets, in value terms was equally distributed as of 9MFY2, with both affordable
and prime housing segment accounting for 34% market share each and mass market housing with 32%
share in overall housing.
44
Outstanding credit ticket-wise breakup (INR Tn.)
Ticket Size FY19 FY20 FY21 FY22 FY23 9M FY24 FY19-23 CAGR
Affordable Housing
8.2 8.6 9.1 9.6 10.2 10.6 5.6%
(Less than Rs. 2.5 million)
Mass Market Housing
5.1 5.7 6.6 7.7 9.2 10.2 15.9%
Rs. 2.5 to 5.0 million
Prime Housing
4.6 5.1 6.0 7.3 9.3 10.7 19.5%
More than Rs. 5.0 million
Ticket Size FY19 FY20 FY21 FY22 FY23 9M FY24

Affordable Housing
46% 44% 42% 39% 35% 34%
Mass Market Housing
29% 30% 30% 31% 32% 32%
Prime Housing
26% 26% 28% 30% 33% 34%
Disbursement Ticket-wise breakup (INR Bn.)

FY19-23
CAGR
Affordable Housing
1345.2 1371.7 1485.6 1961.3 2261.7 1651.8 13.9%
Mass Market Housing
1083.4 1227.0 1552.1 2195.9 2626.9 1982.0 24.8%
Prime Housing
979.2 1137.2 1507.4 2594.6 3682.8 3260.6 39.3%
Ticket-wise share in disbursement (%)

Affordable Housing
39.5% 36.7% 32.7% 29.0% 26.4% 24.0%
Mass Market Housing
31.8% 32.8% 34.1% 32.5% 30.6% 28.7%
Prime Housing
28.7% 30.4% 33.2% 38.4% 43.0% 47.3%
Urban regions account for highest share (~66%) in Housing finance outstanding as of 9MFY24,
followed by Rural regions with ~20% share
As of 9MFY24, urban regions accounted for the highest share in overall housing finance credit with 65.6%
share which was followed by rural regions which accounted for 19.6% share, Semi-urban regions accounted
for 9.1% share in credit outstanding. Among tier’s fastest credit growth during FY19-23 was witnessed in
rural regions which grew at a CAGR of 15.3%, followed by Semi-urban regions with a CAGR of 15.0%.
Urban regions witnessed a CAGR of 11.4% during the fiscals.
Share
Tier (Rs. Tn.) FY19 FY20 FY21 FY22 FY23 9M FY24
(9M FY24)
Urban Regions 12.3 13.2 14.7 16.5 19.1 21.1 65.6%
Semi-Urban Regions 1.4 1.6 1.8 2.1 2.5 2.9 9.1%
Rural Regions 3.1 3.4 3.9 4.5 5.4 6.3 19.6%
45
Others 0.9 1.0 1.1 1.3 1.5 1.8 5.7%
Semi-urban regions had the highest asset quality among major tier brackets as of 9MFY24
Tier FY19 FY20 FY21 FY22 FY23 9M FY24

Urban Regions
1.6% 2.4% 2.6% 2.5% 2.2% 2.1%
Semi-Urban Regions
1.9% 2.6% 2.5% 2.4% 2.0% 1.8%
Rural Regions
2.3% 3.1% 3.1% 2.8% 2.5% 2.2%
Others
1.5% 1.9% 2.0% 1.9% 1.7% 1.6%
Top 10 states account for ~81% share in overall Housing finance outstanding as of 9MFY24, with
top 5 states accounting for ~57% share
As of 9MFY24, Maharashtra accounted for the highest share in overall housing finance outstanding with
~22% share, which was followed by Karnataka, Tamil Nadu, Telangana, and Gujarat in top 5 states by credit
outstanding with 10.5%, 8.7%, 8.1%, 8.0% share respectively. In terms of asset quality, among the top 20
states Telangana had the highest asset quality with 90+ DPD at 0.9%, followed by Assam and Rajasthan
with 1.0% and 1.3% 90+ DPD respectively. While Tamil Nadu, Delhi and Madhya Pradesh had the lowest
asset quality among top 20 states with 4.0%, 3.3% and 3.1% 90+ DPD respectively.
Maharashtra accounted for the highest share in housing finance credit as of 9MFY24, with ~22%
share
CAGR Share GNPA

State (Rs. 9M GNPA
FY19 FY20 FY21 FY22 FY23 (FY19- (9MFY (9M
Bn.) FY24 (FY23)
23) 24) FY24)
Maharashtra 4065.6 4344.8 4867.4 5483.5 6373.1 7118.0 11.9% 22.1% 2.0% 2.4%
Karnataka 1951.4 2094.2 2292.0 2538.9 2983.4 3369.9 11.2% 10.5% 1.6% 2.1%
Tamil Nadu 1753.0 1883.4 2054.7 2261.3 2560.1 2812.0 9.9% 8.7% 2.3% 4.0%
Telangana 1151.3 1312.6 1536.4 1830.5 2246.6 2611.4 18.2% 8.1% 0.7% 0.9%
Gujarat 1375.0 1502.6 1718.8 2008.4 2298.8 2595.2 13.7% 8.0% 1.6% 2.0%
Uttar
1079.4 1166.6 1299.0 1459.9 1703.4 1924.6 12.1% 6.0% 3.0% 2.6%
Pradesh
Delhi 953.1 997.1 1091.4 1211.3 1401.4 1538.8 10.1% 4.8% 3.4% 3.3%
Andhra
751.4 857.7 970.5 1130.0 1352.9 1536.0 15.8% 4.8% 1.2% 1.5%
Pradesh
Rajasthan 640.8 715.7 816.7 946.4 1120.5 1288.8 15.0% 4.0% 1.3% 1.3%
Kerala 799.2 876.8 954.7 1063.8 1199.9 1285.9 10.7% 4.0% 2.1% 2.5%
West Bengal 597.4 652.2 734.0 847.1 990.1 1093.9 13.5% 3.4% 2.5% 2.7%
46
Madhya
542.7 597.7 669.7 749.3 880.2 1007.9 12.8% 3.1% 3.1% 3.1%
Pradesh
Haryana 567.3 600.9 662.9 757.6 887.4 1002.5 11.8% 3.1% 2.3% 2.1%
Punjab 325.5 346.8 381.8 436.5 502.9 565.7 11.5% 1.8% 3.4% 3.1%
Bihar 187.6 217.1 252.8 301.0 378.6 437.1 19.2% 1.4% 1.8% 1.5%
Odisha 183.3 200.3 226.2 262.8 317.1 354.8 14.7% 1.1% 2.0% 2.0%
Chhattisgarh 176.6 195.1 219.1 243.3 281.5 312.1 12.4% 1.0% 1.8% 1.8%
Uttarakhand 169.3 184.1 211.2 234.3 268.5 299.4 12.2% 0.9% 1.8% 1.7%
Assam 120.7 135.2 149.5 166.4 190.8 205.0 12.1% 0.6% 1.6% 1.0%
Jharkhand 110.5 120.6 134.4 155.2 183.5 203.0 13.5% 0.6% 2.0% 1.9%
Others 361.2 407.3 454.9 517.7 605.1 677.3 13.8% 2.1% 1.7% 1.7%
Among Top 10 states, Delhi had the highest concentration of top 5 districts in overall housing credit
outstanding
Concentration in
Concentration in
Number of portfolio
State Top 5 Districts loan accounts
Districts outstanding
(%)
(%)
Pune, Thane, Mumbai, Mumbai

Maharashtra 36 Suburban, Raigarh 75% 58%
Bangalore, Mysore, Dakshina

Karnataka 30 Kannada, Belgaum, Dharwad 83% 73%
Chennai, Tiruvallur, Coimbatore,

Tamil Nadu 37 Chengalpattu, Kancheepuram 55% 42%
Medchal Malkajgiri, Hyderabad,

Telangana 33 Rangareddy, Sangareddy, 79% 68%
Warangal
Ahmadabad, Surat, Vadodara,
Gujarat 33 Rajkot, Gandhinagar 71% 62%
Ghaziabad, Lucknow, Gautam

Uttar Pradesh 75 Buddha Nagar, Kanpur Nagar, 50% 43%
Agra
Visakhapatnam, Krishna, East
Andhra Pradesh 13 Godavari, Guntur, West Godavari 61% 62%
South Delhi, Northwest Delhi,

Delhi 10 West Delhi, Southwest Delhi, 84% 82%
East Delhi
Ernakulam, Thiruvananthapuram,
Kerela 14 Thrissur, Kottayam, Kollam 60% 55%
47
Jaipur, Jodhpur, Ajmer, Kota,
Rajasthan 33 Udaipur 55% 48%
Share of Top 10 districts in overall housing finance outstanding witnessed a decline from 51% in
FY19 to 48% by 9MFY24
City (Rs. Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24

Mumbai 2209.3 2343.9 2626.4 2963.5 3377.1 3605.0
Delhi NCR 1818.8 1901.8 2075.2 2305.9 2668.5 2889.1
Bangalore 1495.6 1591.4 1742.0 1907.0 2227.0 2453.4
Pune 943.2 998.4 1118.7 1238.5 1451.6 1593.2
Hyderabad 585.7 658.4 763.6 900.2 1099.5 1236.4
Chennai 680.6 707.4 749.6 808.5 905.0 961.5
Kolkata 438.3 471.7 530.7 608.8 703.9 766.1
Ahmadabad 373.0 411.5 477.5 568.4 656.8 717.6
Surat 356.0 370.2 404.9 441.0 481.1 521.4
Jaipur 222.9 241.1 274.8 308.5 355.3 394.7
Others 8739.4 9713.1 10935.2 12555.0 14800.3 16386.0
Public sector banks account for highest share (43%) among lenders in overall housing
finance credit as of 9MFY24
As of 9M FY24, public sector banks account for the highest share in overall housing credit (43.1%), which
was followed by Private Sector banks with 35.6% share and Housing Finance companies with 18.8% share.
During fiscals 2019-23, among major lenders Private Sector banks witnessed the fastest growth in housing
finance credit with a CAGR of 16%, followed by public sector banks with 13.1% CAGR during FY19-23 and
housing finance companies with 10% CAGR.
Lender-wise share in outstanding credit across fiscals 2019 to 2023
Share CAGR
Lender (Rs. Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24
(9M FY24) (FY19-23)
Foreign Banks 241.9 229.9 227.6 247.7 225.7 239.8 0.8% -1.7%
Housing Finance Companies 4228.5 4300.5 4470.3 4703.4 5389.4 5919.5 18.8% 6.3%
NBFCs 125.1 135.9 261.8 196.0 282.9 349.1 1.1% 22.6%
Private Sector Banks 5626.2 6100.9 7215.8 8774.0 10167.8 11218.9 35.6% 15.9%
Public Sector Banks 7630.2 8612.6 9469.0 10587.2 12496.6 13586.4 43.1% 13.1%
Small Finance Bank 11.0 29.7 54.3 97.3 163.8 211.1 0.7% 96.2%
Public Sector Banks account for highest share (~40%) among lenders in overall housing
finance disbursement as of 9MFY24
Among major lenders, Private Sector Banks witnessed the fastest growth in housing finance disbursement
across fiscals 2019 to 2023, followed by Public Sector Banks and Housing Finance companies with ~23%
and ~21% CAGR from FY19-23. Among lenders, public sector banks had the highest share, at ~40%,
48
followed by private sector banks with ~37% share and Housing finance companies with ~19% share as of
9MFY24.
Lender wise disbursement in Overall Housing Finance from FY19-9M FY24
Lender (INR Share CAGR

FY19 FY20 FY21 FY22 FY23 9M FY24
Bn.) (9MFY24) (FY19-23)
Foreign Banks 21.9 24.2 32.6 57.5 98.9 88.5 1.3% 45.7%
Housing Finance
782.6 655.8 884.7 1280.6 1652.8 1323.3 19.2% 20.6%
Companies
NBFCs 34.9 38.5 36.4 60.6 117.6 117.0 1.7% 35.5%
Private Sector
1048.3 1234.0 1706.0 2724.9 3171.9 2520.3 36.6% 31.9%
Banks
Public Sector
1511.9 1766.7 1860.9 2575.4 3441.5 2771.8 40.2% 22.8%
Banks
Small Finance
8.2 16.8 24.6 52.7 88.7 73.5 1.1% 81.4%
Bank
Lender wise disbursement in Prime Housing Finance from FY19-9M FY24
Share CAGR
Lender (INR Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24 (9M (FY19-
FY24) 23)
Foreign Banks 17.5 19.4 27.4 49.5 89.5 81.0 2% 50.4%
Housing Finance
155.7 119.1 160.7 260.5 407.4 361.9 11% 27.2%
Companies
NBFCs 8.2 9.9 10.0 23.5 50.2 41.8 1% 57.4%
Private Sector Banks 452.8 531.0 776.8 1369.8 1712.5 1470.1 45% 39.5%
Public Sector Banks 344.9 457.6 532.2 889.8 1417.5 1301.0 40% 42.4%
Small Finance Bank 0.1 0.2 0.4 1.6 5.6 4.8 0% 222.6%
Lender wise disbursement in Affordable Housing Finance from FY19-9M FY24
Share CAGR
Lender (INR Bn) FY19 FY20 FY21 FY22 FY23 9M FY24
(9MFY24) (FY19-23)
Foreign Banks 1.2 1.3 1.3 2.0 2.2 1.7 0.1% 15.0%
Housing Finance
408.9 340.0 417.0 576.8 721.2 554.9 33.6% 15.2%
Companies
NBFCs 17.2 18.8 18.7 25.3 47.4 55.9 3.4% 28.8%
Private Sector Banks 287.0 337.5 395.0 542.2 553.7 389.1 23.6% 17.9%
Small Finance Bank 7.6 14.7 21.3 44.5 68.0 54.0 3.3% 73.1%
Private Sector Banks had the highest asset quality among major lenders with 90+ DPD at
1.2% as of 9MFY24
In FY20, GNPAs of the overall housing loan portfolio increased sharply from 1.6% to 2.3% due to slippages
as consumer perception of the general economic situation, employment scenario, and household income
had plunged. Continuing consumer pessimism and lockdowns in FY21 further impacted self-employed
customers and micro, small, and medium enterprises.
49
Housing finance companies also faced asset-quality challenges, leading to a peak rise of ~60 bps in GNPAs
to 3.9% in FY21. Subsequently, the asset quality of the overall housing finance improved to 2.3% in fiscal
2022, and 2.0% in FY23, led by economic recovery, pent-up credit demand, and government schemes such
as the Liquidity Infusion Facility Scheme, the Affordable Housing Fund and other measures announced
under the ambit of the Atma Nirbhar Bharat Package.
Among lenders, private sector banks had the highest asset quality, with 90+ DPD at ~1.2%, followed by
public sector banks at ~1.6%. 90+ DPD for housing finance companies stood at ~4.8% as of 9M FY24.
Private Banks had the highest asset quality among lenders as of 9M FY24
Lender FY19 FY20 FY21 FY22 FY23 9M FY24

Foreign Banks 2.34% 2.66% 2.89% 2.52% 2.00% 1.66%
Housing Finance
1.65% 3.35% 3.86% 4.18% 3.44% 4.77%
Companies
NBFCs 4.18% 4.44% 2.51% 5.46% 4.20% 2.49%
Private Banks 1.02% 1.22% 1.81% 1.37% 1.21% 1.23%
Public Sector Banks 1.97% 2.51% 2.14% 2.12% 1.95% 1.68%
Small Finance Banks 3.11% 2.07% 2.35% 2.82% 2.87% 2.46%
Bonds and Term loans dominated the borrowing mix of HFCs in FY23
Non-convertible debentures (NCDs) were the main source of borrowings for HFCs; however, their share
declined from 47% as of FY19 to 38% as of FY23. During FY23, the repo rate rose cumulatively by 250
bps causing capital market borrowings to become more expensive, however, the share of term loans of
banks continued to increase and rose 300 bps to 36% due to better cost of funds compared with capital
market borrowings. Refinancing from NHB accounts for 5% share of the total borrowing mix of HFCs, it
accounts for a major share in the borrowing mix of affordable housing finance companies.
According to CRISIL MI&A, share of term loans in borrowings is estimated to have climbed ~100 bps to
37% in FY24, and the share of NCDs is estimated have rose another 100 bps to 39%. Going forward, share
of term loans is likely to rise by another 100 bps with banks increasing their exposures to HFCs owing to
increased risks weight by RBI for Banks lending to NBFCs which specifically excludes HFCs
Share of term loans and NCD issuances to rise in the borrowing mix of HFCs/NBFCs
50
10% 10% 5% 11% 10%
7% 12%
6% 5% 4% 6% 5% 6%
7% 3% 4% 3% 3%
7% 8% 6% 5%
5% 8%
26% 32% 31% 37%

33% 36%
47% 43% 44% 39% 38% 39%
FY19 FY20 FY21 FY22 FY23 FY24E
Bonds NCDs Term Loans Deposits Commercial Paper Refinance from NHB Other loans
Note: E – Estimated, Other loans includes Inter corporate loans, external commercial borrowings
Source: Company Reports, CRISIL MI&A
Co lending partnerships between banks and NBFC/HFCs

Co-lending arrangement between Bank and NBFC / HFCs is to extend credit by joint contribution of funds
at the facility level by both the lenders and sharing of risks and rewards. The revised Co-lending Model
(CLM) put in place by RBI vide notification RBI/2020-21/63 dated 05 November 2020, with intention to
improve the flow of credit to the unserved and underserved sector of the economy and make available
funds to the ultimate beneficiary at an affordable cost, considering the lower cost of funds from banks and
greater reach of the NBFCs / HFCs.
Under the co-lending model banks are permitted to co-lend with all registered NBFCs (including HFCs)
based on a prior agreement. The co-lending banks will take their share of the individual loans on a back-
to-back basis in their books. However, NBFCs shall be required to retain a minimum of 20 per cent share
of the individual loans on their books. Additionally, banks can claim priority sector status in respect of their
share of credit while engaging in the CLM adhering to the specified conditions.
Shift in housing finance landscape post-merger of HDFC Bank and HDFC
Merger of HDFC Bank and HDFC took place in the first half of fiscal 2024 which has led to changes in the
dynamics of the retail housing finance market. In fact, growth of HFCs between fiscals 2019 and 2021 was
supported by high growth of HDFC due to its wide geographic reach and market penetration. At end-fiscal
2023 of the Rs 28.7 trillion housing finance market, the share of banks was ~79%, with the balance with
HFCs/NBFCs. Some of the key players after HDFC are LIC Housing Finance, Bajaj Housing Finance,
Indiabulls Housing Finance, PNB Housing Finance and CanFin Homes.
Following the merger of the two entities, the market share of banks vis-à-vis NBFC/HFC has shifted 80:20
from 66:34, with banks having majority market share. Further, in terms of HFCs/NBFCs, other large players
with favourable funding profile, strong parentage, and capability to invest and expand into newer
51
geographies would gain market share from smaller players. Further this would also open up funding limits
for HFCs from banks to lend to the end consumer.
Key Risks in the Overall Housing Finance Industry
Economic Scenario: Any trends or events that have a significant impact on India's economy, including a
rise in interest rates, could impact the financial standing and growth plans of HFCs. A decline in the interest
rate with strong growth in the economy will boost the purchasing power of people, thus boosting demand
for houses and housing loans. When the government introduces rules and regulations such as the Benami
Transactions Act, establishes bodies such as the Real Estate Regulatory Authority, or takes decisions such
as demonetisation, all to control illegal activities and curb black money, demand for housing and housing
loans takes a hit.
Insufficiency of data for credit appraisal: Credit-score availability in India is still at a nascent stage
despite the presence of credit bureaus. In several cases, borrowers lack a formal proof of income
documents. This makes it difficult to judge the ability of the borrower to repay.
Liquidity Risk: The apartment culture has still not developed in many of the semi-urban and rural areas,
leading to financing of individual properties. This makes it harder to sell a property that is built according to
the needs of the borrower. Also, in rural areas, it may become difficult to find a buyer for a repossessed
property due to cultural issues. All this leads to liquidity risk.
Collateral Fraud: The rising number of collateral frauds in the sector is becoming a serious issue. As a
result, lending institutions are being forced to implement additional control measures, which increase their
underwriting expenses.
Delay in project approvals and construction: The cash flows of HFCs are largely dependent on the
timely completion of projects in which their customers have bought housing. If the project gets delayed, the
borrower may start defaulting on loans. Additionally, project delays also tend to impact growth in the loan
book.
Thin spreads in Housing Finance: HFCs face a risk of thin net interest margins due to lower interest rates
in the segment as compared to other asset classes like MSME loans, vehicle financing etc. This is further
aggravated due to intense competition in the segment among HFCs, banks and NBFCs.
Asset Liability Mismatch: Housing finance faces significant ALM challenges, arising due to inherent
mismatch between the long-term nature of housing loans and the shorter-term funding sources used by
housing finance companies (HFCs). This creates a maturity mismatch, where assets have longer durations
than liabilities.
Competitive Scenario
52
Trend in Housing Finance AUM for key housing finance companies
Assets under management CAGR

FY20 FY21 FY22 FY23 FY24
(Rs. Bn.) (FY20-24)
LIC Housing Finance Limited 1,619 1,807 2,042 2,288 2,441 10.8%
Bajaj Housing Finance Limited 221 239 332 411 528 24.4%
PNB Housing Finance Limited 488 437 409 473 512 1.2%
Can Fin Homes Limited N/A N/A N/A 249 273 -
ICICI Home Finance* 97 104 119 127 158 13.0%
Note: Housing Loan book considered for ICICI Home Finance, Source: Company Reports. CRISIL MI&A
Asset quality for HFCs to improve in FY25, with rise in return on assets
As per CRISIL MI&A estimates, net interest margins for HFCs stood at 3.2% in FY24, which is expected to
reach 3.3% in FY25 due to expectation of decline in repo rates in the first quarter of FY25. During FY24-
25, GNPA (90+ DPD) for HFCs is expected to witness a slight decline to 1.3% in FY25. Further, credit costs
are expected to decline 20 bps in fiscal 2025 on account of higher write-offs in the first half of fiscal 2024
translating into an improvement in return on assets in FY25 at 2.0%.
Parameter FY20 FY21 FY22 FY23 FY24E FY25P

Net Interest
2.5% 2.8% 3.0% 3.3% 3.2% 3.3%
Margins (%)
Credit Cost 0.6% 0.7% 0.6% 0.5% 0.6% 0.4%
Return on
1.3% 1.4% 1.5% 1.9% 1.9% 2.0%
Assets (%)
GNPA (%) 2.4% 2.2% 2.1% 1.6% 1.4% 1.3%
Source: Company Reports. CRISIL MI&A
53
Overview of Prime Housing Finance Market in India
Prime Housing Finance Market in India stood at Rs. 9.3 Tn. as of FY23, witnessing a CAGR
of 19.5% from FY19-23
Prime housing finance market in India is defined by loans above Rs. 5.0 million in ticket size, the market
has witnessed a CAGR of 19.5% from FY19-FY23, to reach Rs. 9.3 Tn. from Rs. 4.6 Tn. in FY19, the growth
witnessed by prime housing finance market during the fiscals has been faster than the growth in overall
housing finance market of India, during FY19-23, overall housing witnessed a CAGR of 12.6%.
in Rs. Tn.
20.7
10.7
9.3
7.3
5.1 6.0
4.6
Urban Regions account for ~77% of the total prime housing finance credit outstanding
Urban regions accounted for the highest share of Prime housing finance credit outstanding in FY23, with a
share of 77%, witnessing a CAGR of 17.6%, followed by rural regions with 11% share and semi-urban
regions with 6.2% share. Among major tier brackets, semi-urban regions witnessed the fastest growth with
a CAGR of ~28%, followed by rural regions with 26% CAGR and urban regions with 18% CAGR during
fiscals 2019-23.
Share CAGR
Tier (Rs. Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24
(9M FY24) (FY19-23)
Urban Regions 3862.6 4211.6 4915.7 5884.9 7382.5 8466.8 77.4% 17.6%
Semi-Urban Regions 198.8 236.1 294.8 384.5 540.2 675.8 6.2% 28.4%
Rural Regions 373.6 440.3 541.2 691.3 957.2 1198.5 11.0% 26.5%
Other Regions 147.4 184.8 241.6 328.5 466.8 592.2 5.4% 33.4%
Top 5 states account for ~67% of Total Prime Housing Finance market outstanding as of 9M FY24
Maharashtra tops the list in share of total prime housing finance market outstanding accounting for ~28%
market share, which was followed by Karnataka with ~15% share, Telangana (~10%), Delhi (7.5%) and
Tamil Nadu with ~7.4% share, these top 5 states accounted for a total of 67% share as of 9M FY24. Fastest
growth among the top 5 states was witnessed in Telangana with a CAGR of ~34% from FY19-23, followed
by Karnataka with ~19% CAGR.
54
Top 10 states account for ~88% of Total prime housing finance market outstanding as of 9M FY24
Share CAGR
State (Rs. Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24
(9M FY24) (FY19-23)
Maharashtra 1453.3 1574.7 1844.9 2175.2 2681.9 2958.7 27.6% 16.6%
Karnataka 668.3 757.9 890.9 1062.5 1357.3 1570.0 14.6% 19.4%
Telangana 275.2 350.6 464.8 632.5 892.6 1100.7 10.3% 34.2%
Delhi 443.6 463.2 516.5 603.3 747.8 804.1 7.5% 13.9%
Tamil Nadu 370.5 405.1 454.5 543.2 690.0 789.4 7.4% 16.8%
Gujarat 243.8 262.1 318.8 393.0 491.4 558.8 5.2% 19.2%
Haryana 233.3 248.5 283.8 345.3 438.1 504.8 4.7% 17.1%
Uttar Pradesh 198.9 218.6 252.2 311.8 414.2 492.0 4.6% 20.1%
Andhra Pradesh 87.8 113.4 144.1 198.5 286.9 362.4 3.4% 34.5%
Kerela 110.3 126.7 145.3 174.6 223.0 259.8 2.4% 19.2%
West Bengal 109.2 116.5 144.3 179.0 224.9 257.0 2.4% 19.8%
Rajasthan 103.5 113.5 137.7 167.6 216.2 254.0 2.4% 20.2%
Madhya Pradesh 66.2 72.7 87.2 107.2 143.2 170.5 1.6% 21.3%
Punjab 53.9 56.6 66.8 82.6 105.2 122.3 1.1% 18.2%
Bihar 19.9 25.6 35.1 49.6 76.4 97.1 0.9% 40.0%
Others 144.8 167.0 206.5 263.4 358.0 433.8 4.0% 25.4%
Top 10 cities accounted for ~68% share of total prime housing finance outstanding as of 9M FY24
As of 9MFY24, top 10 cities accounted for ~68% share in total prime housing finance credit outstanding
with Mumbai accounting for the highest share (19%) followed by Delhi NCR with ~13% share and Bangalore
with ~13% share. Top 5 cities accounted for ~57% share in the total prime housing finance outstanding
witnessing a fall in share from 63% in FY19.
Share CAGR
City (Rs. Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24 (9M (FY19-
FY24) 23)
Mumbai 1097.20 1177.99 1363.01 1594.83 1903.29 2043.50 19.0% 14.8%
Delhi NCR 743.26 779.46 871.85 1026.83 1287.70 1431.33 13.3% 14.7%
Bangalore 604.69 682.34 799.84 943.47 1193.89 1373.47 12.8% 18.5%
Hyderabad 190.87 235.00 301.40 395.34 540.76 646.97 6.0% 29.7%
Pune 258.37 285.77 348.16 414.89 543.40 632.75 5.9% 20.4%
Chennai 235.72 251.87 277.03 322.44 396.41 441.70 4.1% 13.9%
Ahmadabad 99.35 110.08 134.28 171.29 212.85 235.29 2.2% 21.0%
Kolkata 100.18 105.88 130.23 159.63 197.30 221.89 2.1% 18.5%
Surat 74.03 75.17 87.87 98.41 113.28 127.65 1.2% 11.2%
Jaipur 53.77 56.11 67.13 78.53 97.92 112.26 1.0% 16.2%
Lucknow 28.23 32.62 37.96 47.37 62.35 73.60 0.7% 21.9%
Indore 31.22 33.52 39.96 48.13 62.96 72.98 0.7% 19.2%
Visakhapatnam 20.25 24.56 30.96 42.13 58.65 70.41 0.7% 30.4%
Ernakulam 34.49 38.08 43.36 50.46 61.26 70.14 0.7% 15.4%
Coimbatore 28.78 32.52 37.62 45.43 59.76 69.64 0.6% 20.0%
Others 982.06 1151.94 1422.94 1850.27 2555.20 3111.92 29.0% 27.0%
55
Growth drivers in the Prime Housing Finance Segment:
Rapid Urbanization and Rise in affluence: Rapid urbanization has taken place in metro and urban
regions which has led to rise in population of upper middle-class population and high net worth individuals
in the nation. With rise in affluence, there is a shift in lifestyle preferences where individuals prefer to live in
prime locations in metro cities and bigger houses with multiple amenities.
Rising real estate prices in Metro cities: CRISIL MI&A estimates price appreciation in real estate across
metro cities was ~5-7% in FY23 and ~4% in FY24, while few metro cities like NCR and Hyderabad
witnessed even steeper price appreciation, going forward prices are expected to rise by 3-5% in FY25.
Infrastructural development and growing connectivity: Significant improvements have been made in
infrastructure development along with rising metro connectivity and proximity to airports which has led to
rise in industrial growth in Tier-1 & 2 cities, while also creating demand for housing near business hotspots
across regions.
Rise in aspiration to own spacious and luxurious homes: Post covid-19 induced lockdowns, owing to
rise in amount of time spent indoors and rising hybrid work culture, home buyers now look for larger,
spacious and luxury housing options as housing is no longer considered a necessity.
Competitive Landscape in the Prime Housing Segment

Banks dominate the prime housing finance segment in terms of market share in total credit
outstanding
Prime housing finance segment is primarily dominated by banks, with private sector banks accounting for
highest share in in credit outstanding with 48% as of 9M FY24, followed by public sector banks with 37%
share. Housing finance companies account for the third highest share among lenders with 11% share. While
NBFCs account for very minuscule share in outstanding credit with 1% share as of 9M FY24.
Private sector banks account for highest share in the Prime Housing Segment with ~48%
share as of 9M FY24
Lender Outstanding (Rs. Bn.) FY19 FY20 FY21 FY22 FY23 9MFY24
Foreign Banks 190.9 184.4 186.2 207.1 191.1 202.5
Housing Finance Companies 867.6 821.8 811.0 839.2 1056.0 1194.7
NBFCs 47.1 45.7 87.9 57.4 103.6 125.9
Private Sector Banks 2170.1 2376.1 2919.5 3706.9 4583.0 5191.4
Public Sector Banks 1306.5 1644.5 1988.1 2476.6 3405.7 4010.5
Small Finance Banks 0.2 0.5 0.9 2.2 7.5 10.5
Lender Share (%) FY19 FY20 FY21 FY22 FY23 9M FY24

Foreign Banks 4.2% 3.6% 3.1% 2.8% 2.0% 1.9%
Housing Finance Companies 18.9% 16.2% 13.5% 11.5% 11.3% 11.1%
NBFCs 1.0% 0.9% 1.5% 0.8% 1.1% 1.2%
56
Private Sector Banks 47.4% 46.8% 48.7% 50.9% 49.0% 48.4%
Among major lenders, in prime housing finance segment, Private sector banks had the best asset
quality (~1.0%) among lenders as of 9M FY24, followed by public sector banks (~1.5%)
Among major lenders in the prime housing finance segment, private sector banks had the lowest GNPA
(1.0%) among lenders as of 9M FY24, followed by public sector banks with 1.5% and non-banking finance
companies with GNPA at 2.5%. Housing finance companies had their GNPA at ~4.4% as of 9MFY24.
Foreign Banks 1.62% 1.91% 2.14% 1.77% 1.72% 1.34%

Housing Finance
2.03% 5.15% 6.36% 6.71% 4.85% 4.42%
Companies
NBFCs 4.47% 3.90% 1.55% 5.40% 3.50% 1.91%

Profitability trend of HFCs in the Prime Housing Finance Segment

Housing finance companies focused on the Prime Housing Finance segment had ROAs at 1.4% as of
FY23, which has increased from 1.1% from FY19. Cost of funds for HFCs has declined from 7.4% in FY19
to 6.5% in FY23, due to decline in cost of funds and rise in yield on advances, NIMs for HFCs has increased
from 2.0% in FY19 to 2.6% in FY23, while credit costs and operational expenses continue to remain low,
with Opex ranging from 0.5 to 0.6% and credit costs ranging from 0.3% to 0.6%
Improving profitability trend of HFCs in the Prime Housing Finance Segment

Parameters FY19 FY20 FY21 FY22 FY23
Yield on Advances 8.8% 9.7% 9.3% 8.2% 8.6%
Cost of Funds 7.4% 7.8% 7.2% 6.2% 6.5%
Net Interest Margins 2.0% 2.3% 2.4% 2.3% 2.6%
Operational Expenses 0.5% 0.5% 0.5% 0.6% 0.6%
Credit Cost 0.3% 0.8% 0.7% 0.7% 0.6%
Return on Assets 1.1% 1.1% 1.3% 1.1% 1.4%
Note: Bajaj Housing Finance, Limited, LIC Housing Finance Limited, PNB Housing Finance Limited, Can Fin Homes Limited and
Tata Capital Housing Finance Limited considered for calculation of profitability of players involved in prime housing finance segment.
57
Overview of Affordable Housing Finance Market in
India (<Rs.2.5 million)
As per Refinance Scheme under Affordable Housing Fund for the Financial Year 2021-22 issued by the
National Housing Bank, read with the Master Directions–Reserve Bank of India (Priority Sector Lending–
Targets and Classification) Directions, 2020.” Housing Loans with a ticket size of less than Rs. 2.5 million
are considered as Affordable Housing Loans.
Encouraging and favourable trends in affordable housing finance market (loans up to Rs.
2.5 million); market to bounce back strongly in the long term
The overall size of the affordable housing finance market in terms of loan outstanding was Rs 10.6 Tn. as
of 9MFY24, constituting around 34% of the overall housing finance market. Public Sector Banks have the
highest market share of ~46% in the Affordable Housing finance segment. Housing Finance Companies
accounted for 27% of the market (Outstanding loans of Rs 2.8 trillion as of 9MFY24) followed by Private
banks with market share of 24% (outstanding loans of Rs 2.5 trillion as of 9M FY24).
Between fiscals 2019 and FY23, the growth in the affordable housing loans has remained subdued, with
the segment having witnessed a CAGR of 5.6% as compared to overall housing loans, which has grown
by ~12.6% during the same time. This can be primarily attributed to a slowdown in economic activity, funding
challenges due to NBFC crisis and the Covid-19 pandemic. Further, rise of hybrid work model and working
from home along with rising propensity to spend merged with rising standard of living due to rising incomes
of individuals has led to an increase in demand for bigger residential homes. As a result, the sale in
affordable housing took a beating whereas high-end and mid-segment housing gained the maximum in the
last couple of years.
In fiscal 2021, with the onset of pandemic in the first half of the fiscal, it had a disproportionate impact on
the segment’s EWS and LIG customers vis-a-vis the overall segment that caters to salaried individuals,
whose incomes have been relatively stable. However, with faster-than-expected recovery in the second
half because of the central and state government measures, proactive measures by RBI and tax sops with
low interest rates led to growth in the affordable housing segment.
The segment growth was again curtailed by the pandemic’s second wave in the first quarter of fiscal 2022,
leading to localized lockdowns by the state governments, which affected economic activities in tier II and III
cities. But continued assistance from the government and the central bank, supported by higher demand
for housing, and continued penetration in tier II and III cities by affordable HFCs helped the segment recover
and bounce back.
Affordable Housing finance market to grow at 8-10% between FY23-27
58
INR. Tn.
14.4
10.2 10.6
9.1 9.6
8.2 8.6
While the market has grown at a tepid pace in the past 2-3 years, CRISIL MI&A is sanguine on future growth
due to the following reasons:
• Government’s increased focus on housing and incentives being given by some state governments
such as lowering stamp duties to aid housing demand
• Rising demand for affordable homes as consumers increasingly work out of Tier 3/4 cities in a post-
Covid world
• Preference for owning homes seems to be on the rise in the post-Covid world
CRISIL MI&A expects the industry to pick up steam gradually and the affordable housing segment to touch
Rs 14.4 trillion by FY27, translating into an 8-10% CAGR between FY23-27.
Top 10 states account for ~78% of total affordable housing credit outstanding as of 9M
FY24
There are wide variations in size and growth in the Affordable Housing finance segment across states and
within various districts in the same state as well, which indicate latent opportunity for offering loans to
unserved or underserved customers. Based on loans outstanding in the affordable housing finance market,
among states, as of 9M FY24 Maharashtra accounted for the highest share in the affordable housing
finance segment, accounting for ~18% share, which was followed by Gujarat, Tamil Nadu, and Uttar
Pradesh accounting for ~11%, ~9% and ~7% respectively.
9M Share CAGR
State (Rs. Bn.) FY19 FY20 FY21 FY22 FY23
FY24 (9M FY24) (FY19-23)
Maharashtra 1521.9 1571.3 1641. 1718.8 1796.6 1872.4 17.6% 4.2%
Gujarat 814.9 879.9 966.2 1072. 1124.9 1187.1 11.2% 8.4%
Tamil Nadu 828.4 864.1 915.4 951.4 988.9 997.9 9.4% 4.5%
Uttar Pradesh 553.2 581.3 626.7 662.2 709.1 748.9 7.0% 6.4%
Karnataka 586.2 590.3 590.4 600.4 631.2 656.2 6.2% 1.9%
59
Rajasthan 387.6 426.7 467.6 518.0 575.8 629.0 5.9% 10.4%
Kerela 471.7 499.6 523.6 550.9 572.9 574.3 5.4% 5.0%
Andhra Pradesh 431.9 453.9 469.4 492.4 527.9 553.4 5.2% 5.1%
Madhya Pradesh 365.3 396.3 430.7 461.1 509.1 552.3 5.2% 8.7%
Telangana 452.9 464.3 477.0 488.8 509.2 526.4 4.9% 3.0%
West Bengal 349.1 372.2 395.6 426.9 465.5 489.6 4.6% 7.5%
Delhi 242.2 247.4 258.2 263.8 270.3 278.5 2.6% 2.8%
Punjab 197.1 206.0 216.4 233.5 250.1 264.9 2.5% 6.1%
Haryana 191.3 199.0 208.1 217.9 227.1 233.2 2.2% 4.4%
Bihar 113.7 124.5 135.3 147.8 167.9 182.3 1.7% 10.2%
Others 674.8 719.8 766.2 807.9 862.2 889.5 8.4% 6.3%
Top 10 cities account for ~30% share of total affordable housing credit outstanding as of 9M FY24
Share CAGR
City (Rs. Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24
(9M FY24) (FY19-23)
Delhi NCR 548.7 561.9 587.5 606.3 626.0 649.8 6.1% 3.3%
Mumbai 573.1 582.4 603.0 623.7 623.9 642.8 6.0% 2.1%
Pune 327.8 329.6 337.0 341.1 347.7 354.0 3.3% 1.5%
Kolkata 228.8 240.2 253.7 270.9 291.9 307.0 2.9% 6.3%
Bangalore 315.7 307.8 301.0 294.8 299.2 301.4 2.8% -1.3%
Surat 200.1 207.2 217.4 227.7 232.4 242.5 2.3% 3.8%
Ahmadabad 172.4 185.5 204.3 224.3 230.9 241.6 2.3% 7.6%
Chennai 206.7 203.9 203.3 198.5 194.3 191.3 1.8% -1.5%
Hyderabad 179.7 179.9 182.0 181.8 184.1 186.0 1.7% 0.6%
Jaipur 111.2 119.5 129.8 137.4 145.9 157.1 1.5% 7.0%
Indore 84.5 91.1 99.2 104.9 116.3 127.2 1.2% 8.3%
Nashik 85.5 89.3 97.8 106.7 114.3 123.3 1.2% 7.5%
Vadodara 93.4 95.9 103.1 111.0 112.6 117.7 1.1% 4.8%
Coimbatore 87.2 92.3 98.6 101.8 106.8 108.0 1.0% 5.2%
Rajkot 57.9 65.1 75.6 86.7 91.2 96.2 0.9% 12.0%
Others 4909.8 5245.7 5596.0 5997.5 6471.6 6790.7 63.8% 7.1%
Housing finance companies accounted for second highest share among lenders in the affordable
housing segment as of 9M FY24
60
Among lenders, as of 9M FY24, public sector banks accounted for the highest share (46%), which was
followed by housing finance companies accounting for ~27% share and private banks which accounted for
24% share.,share of housing finance companies rose in 9MFY24 to 27% from 26% in FY22, primarily due
to the below listed factors:
•Creation of niches in catering to particular categories of customers

•Strong understanding of customer segment, excellent customer service and diverse channels of business
sourcing
•Ability to assess collateral in smaller towns
•Ability to assess and underwrite non-salaried individuals
•Focus and presence in smaller cities as well
These factors are expected to help them maintain market share in the future as banks have become risk
averse and are focusing on high ticket customers with good credit profiles. By virtue of being largely focused
on metros and urban areas, ticket sizes of banks and large HFCs have followed rising property prices. A
focus on the urban salaried segment by banks and large HFCs has left non-salaried as well as Tier III, and
rural market open to anyone with the capability to operate in that segment.
Housing finance companies accounted for second highest share among lenders in the affordable
housing segment as of 9M FY24
Lender (Rs. Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24

Foreign Banks 18.7 16.1 14.0 13.0 10.2 11.0
Housing Finance Companies 2254.2 2331.9 2404.9 2484.5 2670.2 2865.5
Non-Banking Finance Companies 45.4 53.1 91.2 94.1 119.2 151.9
Private Sector Banks 1789.5 1897.4 2140.3 2420.1 2484.2 2599.0
Public Sector Banks 4064.7 4273.1 4391.7 4519.3 4773.8 4843.7
Small Finance Banks 10.3 25.9 47.1 84.1 131.6 165.6
Source:CRIF Highmar, CRISIl MI&A
Public sector banks accounted for the highest share in affordable housing credit outstanding
among lenders as of 9M FY24
Lender Share (%) FY19 FY20 FY21 FY22 FY23 9M FY24

Foreign Banks 0.2% 0.2% 0.2% 0.1% 0.1% 0.1%
Non-Banking Finance Companies 0.6% 0.6% 1.0% 1.0% 1.2% 1.4%
Source:CRIF Highmark, CRISIl MI&A
61
Private Sector banks had the highest asset quality among lenders, followed public sector banks as
of 9M FY24

Foreign Banks 8.6% 10.3% 11.7% 12.8% 6.2% 5.8%
Housing Finance
1.7% 2.9% 3.3% 3.7% 3.4% 5.8%
Companies
Non-Banking Finance
4.7% 5.1% 3.6% 5.2% 4.4% 2.6%
Companies
Profitability trend of HFCs in affordable housing finance segment
Housing finance companies operating in the affordable housing finance segment have witnessed a rise in
their margins from FY20-23, with NIMs rising from 3.5% in FY20 to 5.0% in FY23, during the same period
credit costs for the companies also witnessed a fall from 0.9% in FY20 to 0.4% in FY23. Rising interest
margins followed by fall in credit costs has helped these companies to raise their return on assets, which
rose from 1.3% in FY20 to 2.8% in FY23. Going forward, NIMs for HFCs are expected to grow with rise in
interest income,while credit costs are expected to decline to 0.3% in the next fiscal, this would in-turn
translate into higher return on assets for the companies.
Parameter FY19 FY20 FY21 FY22 FY23

Net Interest Margins 3.5% 3.5% 3.8% 4.6% 5.0%
Credit Cost 0.7% 0.9% 0.8% 0.7% 0.4%
Return on Assets 1.1% 1.3% 1.7% 2.3% 2.8%
Key growth drivers for affordable housing finance
62
• Pradhan Mantri Aawas Yojana -Urban: The scheme aims to fill the supply-demand gap in the housing
sector. On supply side, the scheme offers incentives for beneficiary-led housing, public private
partnerships (PPP) in building homes for economicaly weaker sections (EWS) and low income group
(LIG) by offering incentives such as allowing higher floor space index and announcing grants and
subsidies for slum redevelopment. On the demand side, the PMAY provides credit-linked subsidies to
Government stimulate demand
Initiatives
• Pradhan Mantri Aawas Yojana -Grameen: The scheme is for the rural population who don't have their
own houses. It provides financial assistance and interest rate subsidy
• Relaxation of ECB guidelines: The relaxed external commercial borrowing (ECB) guidelines will
enable easier access to overseas funds and stimulate the sector
• GST: The GST rate for affordable housing projects was cut
• EPF corpous withdrawal: Permission to withdraw 90% of employees provident fund (EPF) corpus
enables prospective home buyers to make the down payment and pay their home loan EMIs
• Regulatory authority of HFCs shifted from NHB to RBI: The Budget 2020 proposed a change in
regulatory oversight and supervision of HFCs from the NHB to the Reserve Bank of India (RBI). This
shift led to more streamlined regulations and better risk management framework for HFCs.
Regulator • NHB refinance: The NHB refinancing schemes help HFCs lower their borrowing costs
initiatives
• PSL guidelines revised: The RBI increased the threshold limit for home loans to be classified as PSL
in order to promote Pradhan Mantri AawasYojana
• Low mortgage penetration

• Rising urbanisation and nuclearisation: Decreasing average household size and rising level of urban
population create more housing demand.
• Rising income levels: Rising income levels help improve the affordability of houses
Other factors • Rising independent housing demand: Increase in share of independent houses helps housing
finance market grow in the long term
Source: CRISIL MI&A
63
4C’s to succeed in affordable housing finance segment
Clear understanding
of micro markets
Customer risk
Collateral risk
assessment
Collection efficiency
Source: CRISIL MI&A
Clear understanding of micro markets
Given the target borrower’s profile, companies need to have a clear and deeper understanding of micro
markets and develop a strong local network. The strong network helps companies to source business from
niche customer category by having references from their existing customers. It is observed that successful
companies in the segment generally focus on a few geographies where they have a good understanding
and scale up gradually to manage costs and asset quality better.
Customer risk
Affordable housing segment customers are generally in formal sector jobs with low incomes, or are self-
employed (carpenter, plumber, vegetable vendor, driver, etc.), people who may not have income proofs.
Due to lack of income proofs, the underwriting process requires detailed personal discussion with the
borrower as well as friends and neighbors in order to assess the source of income and cash flow patterns
as well as the stability and habits of the customer. Given the nature of the process, operating costs are
typically very high; therefore, companies who are, able to achieve a fair degree of standardization in the
process by building models revolving around specific customer profiles and/or geographies are likely to
better manage operating costs.
Customer credit risk assessment procedure

Understanding customer's stability
• Visit borrower's home to understand current situtaion, stability and duration of stay
• Interview neighbours to verify duration, understanding habits
• Check credit and banking history (if applicable)
Understanding customer's source of income
• Visit applicant's business to observe business flows, estimate revenue and costs, etc.
• Understand the business model and its key strength and weakness, fluctations in cash flows, etc.
• Interview business acquaintances, competitors, etc., to benchmark estimates
Standardisation
• Build a database of informal sector customers' income by profession in different localities to increase
assessment reliability
Source: CRISIL MI&A
64
Collateral risk assessment
Properties under the low-income segment sometimes lack proper property titles, especially in the outskirts
of large cities, semi-urban and rural areas. With better availability of information and due diligence by the
technical team, companies can mitigate the risk. While lenders do take appropriate due diligence measures
to safeguard against this risk while sanctioning the loan, there have been instances of borrowers
mortgaging the same property with multiple lenders.
For instance, A CERSAI Search is conducted to enumerate the details of a property and if it has been
mortgaged against a loan. The field investigation team visits the property to look at the land and the
construction status regularly. The financier also conducts a title search, which provides detail such as a
size, location, boundaries, and ownership information. As of now, registration of charge on underlying
property is undertaken by lenders on selective basis (high-ticket loans/in case of corporate borrowers) only.
Collection efficiency
Given that companies in the segment typically cater to the lower income customer segment, many of whom
may not be financially literate, a strong focus on collections and monitoring risk of default at customer level
is vital to manage asset quality. It is observed that events that impact the economy as a whole (such as
demonetization) and local factors (natural calamities or other events in the place of employment/work of
the borrower) have a disproportionate impact on asset quality in the segment. Therefore, companies are
increasingly using analytical and monitoring tools enabled by technology to better predict default risk. In
addition, there is an increasing focus on pushing customers to make EMI payments through ECS.
65
Overview of Loan Against Property (LAP)
Loan Against Property (LAP) is availed by mortgaging a property (residential or commercial) with the lender.
LAP is a secured loan, as it provides collateral to the financier in the form of the property. Its interest rate
is lower than personal or business loans. It could be used for either business or personal purposes. It can
be availed by both salaried and self-employed individuals. For all these reasons, LAP has become popular
among borrowers in recent years. The financiers offering housing loans, also provide LAP loans primarily
due to synergies between the two products, higher yields offered by LAP, while continuing to cater to similar
customer profile, collateral requirement, and ticket size.
Key factors that contributed to high LAP growth are:
• Quick turnaround time, lower interest rate, lesser documentation: LAP loans are disbursed in
about half the time taken for a secured MSME loan. It is also offered at a lower interest rate
than unsecured MSME loans, personal and business loans. LAPs require less documentation than
other secured SME products, leading to fewer hassles for customers.
• Greater transparency in the system: Demonetization, GST, and the government’s strong push
for digitization have led to higher transparency in the system. This will keep pushing up loan amount
eligibility of borrowers. Formalization will also help many new borrowers come under the ambit of
formal lending channels.
• Rising penetration of formal channels: Increase in financial penetration and availability of formal
credit in Tier 2 and Tier 3 cities will reduce the share of informal credit.
• Higher comfort for lenders: Lenders are comfortable disbursing LAP loans, as they offer
favorable risk-return characteristics, compared with MSMEs and unsecured loans. They also offer
higher recovery in case of default (supported by the Securitization and Reconstruction of Financial
Assets and Enforcement of Securities Interest Act, 2002) and better asset quality
The overall Loan against property segment market size has expanded from Rs 5.1 trillion as of fiscal 2019
to Rs. 10.4 trillion as of 9-month fiscal 2024. The growth in this segment is attributed to increasing financial
penetration and an increase in the number of players in the targeted market. Overall LAP portfolio witnessed
a growth of 9.3% year-on-year in fiscal 2021, owing to slowdown in the economic activity and pandemic
induced lockdown imposed by the government. From fiscal 2022 to fiscal 2023, the overall LAP portfolio
grew by 17.9% year-on-year on account of improved economic conditions and normalization of business
activities. Going forward, CRISIL MI&A expects overall LAP portfolio to grow at 13-15% CAGR between
fiscal 2023 and fiscal 2026 aided by increasing lender focus and penetration of such loans, enhanced
availability of data increasing lender comfort while underwriting such loans, enhanced use of technology,
newer players entering the segment, and continued government support.
66
Overall LAP portfolio to grow at 13-15% CAGR between fiscal 2023 and fiscal 2026
(INR Tn.)
16.0
13.5-14.2
14.0
12.0 10.4
10.0 9.4
7.9
8.0 7.0
6.4
6.0 5.1
4.0
2.0
0.0
Note: P: Projected, Overall LAP contains the data from both consumer and commercial bureau
LAP portfolio outstanding (Rs. 5 million to Rs. 10 million ) witnessed a CAGR of 16.7% growth
between fiscal FY19-23
Among major ticket-size brackets, LAP portfolio outstanding ( < Rs. 2.5 million) witnessed the fastest growth
from FY19-23, growing at a CAGR of 20.6% which was followed by loans in the more than Rs. 2.5 million
and less than Rs. 5 million ticket size segment outstanding which grew at a CAGR of 20.1% and loans in
the more than Rs. 5 million and less than Rs. 10 million ticket size segment outstanding which grew at a
CAGR of 16.7% during the fiscals.
LAP portfolio (more than Rs. 20 million) account for highest market share (32.1%) for ticket bracket, in value
terms in 9M FY24, followed by loans in less than Rs. 2.5 million ticket size segment (28.8%) and loans in
the more than Rs. 2.5 million and less than Rs. 5.0 million ticket size segment accounting for 14.0% market
share. In volume terms, LAP portfolio with less than Rs. 2.5 million ticket size segments accounted for the
highest share of the pie, with 84.9% share, in 9M FY24.
Ticket-wise volume outstanding (Number of Active Loans) (in millions)
9M FY24 CAGR
Share (%) (FY19-23)
Less than Rs. 2.5 million 1.9 2.5 2.9 3.6 4.5 5.3 84.9% 23.3%
Rs. 2.5 to 5 million 0.2 0.3 0.3 0.4 0.4 0.5 8.0% 20.7%
Rs. 5 to 10 million 0.1 0.1 0.2 0.2 0.2 0.2 3.7% 17.7%
Rs. 10 to 20 million 0.1 0.1 0.1 0.1 0.1 0.1 1.9% 15.2%
67
More than Rs. 20 million 0.0 0.1 0.1 0.1 0.1 0.1 1.5% 15.1%
Ticket-wise Portfolio breakup (INR Bn.)
9M FY
CAGR
24
Ticket Size FY19 FY20 FY21 FY22 FY23 9M FY24 (FY19-
Share
23)
(%)
Less than Rs. 2.5 million 1,222.0 1,540.8 1,785.3 2,123.4 2,587.7 3,001.3 28.8% 20.6%
Rs. 2.5 to 5 million 616.1 783.6 897.3 1,060.1 1,281.8 1,454.9 14.0% 20.1%
Rs. 5 to 10 million 634.8 799.4 884.2 1,010.9 1,177.6 1,320.9 12.7% 16.7%
Rs. 10 to 20 million 705.1 883.1 945.0 1,041.9 1,184.0 1,297.1 12.4% 13.8%
More than Rs. 20 million 1,894.5 2,381.4 2,470.3 2,703.0 3,103.8 3,346.2 32.1% 13.1%
Lender and Ticket wise share (%) and Portfolio Breakup (INR Bn) (9M FY2024)
Lender / Ticket Less than Rs. Rs. 2.5 to 5 Rs. 5 to 10 Rs. 10 to 20 More than Rs. 20 Total
Size 2.5 million million million million million Industry
Foreign Banks 5.9 13.3 30.5 57.8 248.7 356.3
HFC 751.8 295.3 192.1 145.5 508.6 1,893.3
NBFCs 527.7 262.3 302.3 331.5 764.7 2,188.7
Private Banks 1,076.8 664.3 644.5 672.8 1,671.3 4,729.7
PSU Banks 486.4 199.8 142.6 84.1 147.7 1,060.6
Small Finance
152.7 19.9 8.9 5.3 5.1 191.9
Bank
Total Industry 3,001.3 1,454.9 1,320.9 1,297.1 3,346.2 10,420.5
Ticket-wise Disbursement (INR Bn.)

9M FY CAGR
24 (FY19-
Share 23)
(%)
Less than Rs. 2.5 million 502.4 517.3 502.4 686.5 939.6 736.6 24.9% 16.9%
Rs. 2.5 to 5 million 272.3 255.5 242.3 340.8 468.9 375.8 12.7% 14.6%
Rs. 5 to 10 million 276.3 247.9 212.0 313.3 421.2 362.2 12.2% 11.1%
Rs. 10 to 20 million 317.6 261.2 205.2 311.0 423.2 353.9 12.0% 7.4%
More than Rs. 20 million 972.6 758.0 525.3 886.2 1,318.0 1,128.3 38.2% 7.9%
68
Total Industry 2,341.2 2,039.9 1,687.2 2,537.8 3,570.9 2,956.8 100.0% 11.1%
Urban regions account for highest share (71.0%) in LAP portfolio credit as of 9MFY24 followed by
Rural regions with 16.7% share
As of 9FY24, Urban regions accounted for the highest share in overall LAP portfolio credit with 71.0% share
which was followed by Rural regions which accounted for 16.7% share, and Semi-urban regions accounted
for 7.8% share. Among tier’s, Semi Urban regions witnessed credit growth of 22.2% during FY19-23
followed by Rural regions with a CAGR of 22.0%. Urban regions witnessed a CAGR of 14.6%.
9M FY 24 CAGR
Tier (INR Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24 Share (FY19-
(%) 23)
Urban Region 3,953.3 4,953.8 5,346.0 5,973.9 6,828.9 7,395.4 71.0% 14.6%
Semi-Urban
306.6 391.7 441.3 534.1 682.7 814.6 7.8% 22.2%
Region
Rural Region 655.6 830.9 943.6 1,124.3 1,450.0 1,739.2 16.7% 22.0%
Others 157.7 212.5 252.1 307.6 395.7 471.3 4.5% 25.9%

Maharashtra account for 18.2% share in overall LAP outstanding as of 9MFY24, followed by Tamil
Nadu accounting for 11.1% share while top 5 states accounted for 55.3% share
As of 9MFY24, Maharashtra accounted for the highest share in overall LAP outstanding with 18.2% share,
which was followed by Tamil Nadu, Karnataka, and Gujarat state by credit outstanding with 11.1%, 9.9%,
and 8.9% share respectively. in terms of overall LAP credit outstanding, Top 5 states accounted for total of
55.3% market share in 9M FY24. In terms of asset quality, Telangana stood with the best asset quality
(1.11%), while West Bengal (5.78%) and Kerala (5.03%) states had the worst asset quality as of 9M FY24.
Maharashtra accounted for the highest share in LAP outstanding credit as of 9M FY24, with ~18.2%
share
9M CAGR
GNPA
9M FY24 (FY19- GNPA
State FY19 FY20 FY21 FY22 FY23 (9M
FY24 Share FY23) (FY23)
FY24)
(%)
Maharashtra 1,016.7 1,281.9 1,389.1 1,568.7 1,773.0 1,895.1 18.2% 14.9% 4.66% 4.38%
Tamil Nadu 572.7 697.1 760.9 844.7 1,007.7 1,155.6 11.1% 15.2% 5.47% 4.25%
Karnataka 473.2 596.8 669.6 761.9 918.8 1,030.4 9.9% 18.0% 3.86% 2.96%
Gujarat 457.4 582.6 637.8 724.4 837.6 924.3 8.9% 16.3% 2.65% 2.21%
Delhi 476.6 580.1 610.2 650.9 716.5 758.2 7.3% 10.7% 3.62% 2.80%
Telangana 226.5 309.0 373.1 463.6 597.0 711.1 6.8% 27.4% 1.22% 1.11%
Rajasthan 277.9 354.6 391.2 457.8 551.0 631.6 6.1% 18.7% 3.05% 2.83%
Uttar Pradesh 276.7 337.5 363.3 417.1 510.5 570.9 5.5% 16.5% 4.01% 3.13%
Haryana 223.2 285.3 291.0 332.9 405.0 474.9 4.6% 16.1% 2.68% 1.86%
69
Andhra
158.5 199.5 222.7 266.1 337.0 399.6 3.8% 20.7% 2.98% 2.64%
Pradesh
Madhya
148.5 193.9 220.6 262.4 324.8 372.3 3.6% 21.6% 3.95% 3.36%
Pradesh
Punjab 161.7 203.9 221.1 249.2 281.1 307.9 3.0% 14.8% 4.82% 3.70%
West Bengal 154.3 211.4 224.0 244.9 274.2 289.6 2.8% 15.5% 6.42% 5.78%
Kerala 174.1 208.7 222.6 240.8 270.1 285.1 2.7% 11.6% 5.70% 5.03%
Others 76.5 97.8 102.8 115.6 130.7 142.7 1.4% 14.3% 3.79% 3.24%
Chhattisgarh 65.4 79.5 86.5 96.1 109.7 115.8 1.1% 13.8% 4.50% 3.76%
Uttarakhand 42.3 51.5 57.7 69.6 81.7 91.2 0.9% 17.9% 3.05% 2.57%
Bihar 30.5 38.6 44.4 58.5 77.9 89.4 0.9% 26.4% 4.74% 2.14%
Odisha 29.5 41.3 48.3 56.8 73.7 80.9 0.8% 25.7% 3.54% 3.64%
Assam 17.4 21.0 25.1 30.9 43.9 52.7 0.5% 26.0% 2.74% 2.46%
Jharkhand 13.5 17.3 21.1 27.1 35.4 41.1 0.4% 27.3% 6.93% 2.69%
State wise loan concentration of Top 5 districts (9M FY24)
Share of
Share of
Bottom
State Top 5 Districts Top 5 Bottom 5 Districts
5
Districts
Districts
Pune, Thane, Mumbai, Mumbai Gadchiroli, Hingoli, Sindhudurg, Gondiya
Maharashtra 60.1% 0.6%
Suburban and Nashik and Parbhani
Bangalore, Mysore, Belgaum, Uttara Kannada, Kodagu, Yadgir, Udupi
Karnataka 62.5% 2.9%
Tumkur and Davanagere and Gadag
Coimbatore, Thiruvallur, Chennai, The Nilgiris, Ramanathapuram,
Tamil Nadu 32.6% 3.4%
Chengalpattu and Madurai Perambalur, Tirupathur and Ariyalur
Ahmadabad, Surat, Vadodara, The Dangs, Gir Somnath, Narmada,
Gujarat 63.6% 1.1%
Rajkot and Bharuch Porbandar and Devbhoomi Dwarka
Medchal Malkajgiri, Hyderabad, Kumuram Bheem Asifabad, Mulugu,
Telangana Rangareddy, Sangareddy and 61.8% Adilabad, Jayashankar Bhupalapally and 1.1%
Nalgonda Medak
Ghaziabad, Lucknow, Gautam Mahoba, Shrawasti, Chitrakoot,
Uttar Pradesh 43.4% 0.3%
Buddha Nagar, Agra and Meerut Balrampur and Banda
East Godavari, Visakhapatnam,
Andhra Y.S.R., Srikakulam, Vizianagaram,
Krishna, West Godavari and 58.0% 19.4%
Pradesh Anantapur and Prakasam
Guntur
North West, West, South, South New Delhi, North, North East, Central
Delhi 78.2% 21.3%
West and East and Shahdara
Ernakulam, Thiruvananthapuram, Wayanad, Idukki, Kasaragod,
Kerala 60.8% 13.1%
Thrissur, Kollam and Kozhikode Pathanamthitta and Malappuram
Jaipur, Ajmer, Jodhpur, Bhilwara Dhaulpur, Jaisalmer, Pratapgarh, Karauli
Rajasthan 48.5% 2.1%
and Alwar and Sawai Madhopur
Gurgaon, Faridabad, Panipat, Mewat, Charki Dadri, Fatehabad,
Haryana 52.3% 5.6%
Karnal and Yamunanagar Mahendragarh and Palwal
Kolkata, North Twenty Four
Jhargram, Kalimpong, Dakshin Dinajpur,
West Bengal Parganas, South Twenty Four 62.3% 1.8%
Puruliya and Alipurduar
Parganas, Hugli and Haora
Madhya Indore, Bhopal, Ujjain, Dewas and Dindori, Niwari, Sheopur, Anuppur and
51.0% 0.3%
Pradesh Dhar Umaria
Ludhiana, Jalandhar, Sahibzada
Shahid Bhagat Singh Nagar, Tarn Taran,
Punjab Ajit Singh Nagar, Amritsar and 64.3% 5.8%
Fatehgarh Sahib, Barnala and Mansa
Patiala
Patna, Muzaffarpur, Gaya, Vaishali Arwal, Sheohar, Sheikhpura, Jamui and
Bihar 51.6% 1.6%
and Purba Champaran Kishanganj
Raipur, Durg, Bilaspur, Janjgir - Bijapur, Narayanpur, Sukma, Balrampur
Chhattisgarh 75.7% 0.6%
Champa and Rajnandgaon and Gaurella Pendra Marwahi
70
Khordha, Cuttack, Ganjam, Debagarh, Baudh, Kandhamal, Nuapada
Odisha 52.0% 1.4%
Baleshwar and Puri and Malkangiri
Dehradun, Hardwar, Udham Singh Champawat, Bageshwar, Uttarkashi,
Uttarakhand 90.4% 4.1%
Nagar, Nainital and Garhwal Rudraprayag and Pithoragarh
West Karbi Anglong, South Salmara
Kamrup Metropolitan, Kamrup,
Assam 53.6% Mancachar, Dima Hasao, Majuli and 0.7%
Sonitpur, Barpeta and Nalbari
Karbi Anglong
Ranchi, Dhanbad, Purbi
Jamtara, Pakur, Sahibganj, Godda and
Jharkhand Singhbhum, Hazaribagh and 67.4% 1.5%
Simdega
Bokaro
Private sector banks account for highest share (45.5%) among lenders in overall LAP
outstanding credit in 9M FY24
As of 9M FY24, Private sector banks account for the highest share (45.5%) in overall LAP outstanding
credit, which was followed by NBFCs with 21.0% share and Housing Finance companies (HFCs) with
18.2% share. During the fiscals 2019-23, among lenders the fastest growth in terms of CAGR, was
witnessed by Small Finance banks with a CAGR of 73.1%, followed by Private sector banks and NBFCs
with 24.1% and 16.8% CAGR.
Lender-wise LAP outstanding credit across fiscals 2019 to 2023
CAGR
Lender (INR Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24 (FY19-
23)
Foreign Banks 349.4 422.5 383.7 388.3 364.0 356.3 1.0%
Housing Finance Companies 1,211.3 1,425.8 1,529.9 1,685.0 1,881.4 1,893.3 11.6%
NBFCs 982.3 1,249.7 1,388.5 1,462.9 1,828.7 2,188.7 16.8%
Private Sector Banks 1,762.2 2,456.7 2,838.6 3,427.9 4,183.0 4,729.7 24.1%
Public Sector Banks 757.9 814.5 812.1 924.9 1,010.2 1,060.6 7.4%
Small Finance Banks 10.0 19.7 30.1 50.9 90.0 191.9 73.1%
Total Industry 5,073.2 6,389.0 6,982.9 7,939.9 9,357.3 10,420.5 16.5%

Lender-wise share in LAP outstanding credit across fiscals 2019 to 2023
Lender wise share (%) FY19 FY20 FY21 FY22 FY23 9M FY24
Foreign Banks 6.9% 6.6% 5.5% 4.9% 3.9% 3.4%
NBFCs 19.4% 19.6% 19.9% 18.4% 19.5% 21.0%

Total Industry 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

71
Private sector banks accounted for highest share (45.9%) among lenders in overall LAP
disbursement in 9M FY24
Small finance banks witnessed the fastest growth (42.4%) in LAP disbursement across fiscals 2019 to
2023, followed by Private sector banks and NBFCs with 18.3% and 8.5% CAGR. Among lenders, Private
sector banks had the highest share (45.9%) in overall disbursement followed by NBFCs (23.9%) and HFCs
(16.4%) as of 9M FY24.
Lender-wise share and growth in LAP disbursement across fiscals 2019 to 2023
9M FY CAGR
24 (FY19-
Lender (INR Bn.) FY19 FY20 FY21 FY22 FY23 9M FY24
Share 23)
(%)
Foreign Banks 170.1 159.4 66.7 123.3 169.8 112.9 3.8% 0.0%
Housing Finance
551.0 412.0 314.9 473.8 638.0 485.9 16.4% 3.7%
Companies
NBFCs 562.4 334.6 304.6 432.9 780.5 707.7 23.9% 8.5%
Private Sector Banks 824.6 926.8 850.6 1,268.6 1,612.6 1,357.9 45.9% 18.3%
Small Finance Banks 17.3 24.3 25.2 39.5 71.2 67.7 2.3% 42.4%
Total Industry 2,341.2 2,039.9 1,687.2 2,537.8 3,570.9 2,956.8 100.0% 11.1%
Among lenders in the overall LAP finance market, Private sector banks had the best asset quality
(0.95%) as of 9M FY24
In the past, intense competition in the LAP segment led to aggressive lending by non-banks. They sourced
major proportion of the book through balance transfer, whereby additional top-up loans were given leading
to higher loan-to-value (LTV) ratios and thus higher risks in the LAP book. Between Fiscal 2020 and 2021,
GNPAs of the LAP portfolio increased a sharp ~73 bps to 4.59% due to slippages as consumer perception
of the general economic situation, employment scenario, and household income had plunged. Continuing
consumer pessimism and lockdowns in FY21 further impacted self-employed customers and micro, small,
and medium enterprises.
Housing finance companies also faced asset-quality challenges, leading to a peak rise of GNPAs to 7.47%
in FY22 and 7.85% FY23. Subsequently, the asset quality of the overall LAP segment improved to 3.94%
in fiscal 2023.
Among lenders private banks had the best asset quality (0.95%) as of 9M FY24, which was followed by
small finance banks with 2.91% GNPA. As of 9M FY24, NBFCs and HFCs had 4.53% and 6.79% GNPAs
respectively. Among major lenders, HFCs, NBFCs and Public banks witnessed the significant fall in their
GNPAs in 9M FY24.
Private banks had the highest asset quality among lenders in LAP Finance segment as of 9MFY24
72
Lender-wise GNPA (90+DPD) in %age
Foreign Banks 1.81% 2.45% 4.67% 5.16% 4.16% 3.82%
Housing
Finance 1.85% 4.84% 5.62% 7.47% 7.85% 6.79%
Companies
NBFCs 4.72% 5.54% 6.75% 7.13% 5.36% 4.53%
Private Sector
1.42% 1.29% 2.00% 1.41% 1.10% 0.95%
Banks
Public Sector
6.91% 8.06% 7.96% 7.57% 5.81% 4.62%
Banks
Small Finance
2.17% 1.80% 4.23% 4.71% 3.08% 2.91%
Banks
Total Industry 3.01% 3.85% 4.59% 4.67% 3.94% 3.27%
LAP portfolio with ticket size between Rs. 2.5 & Rs. 5.0 million had the lowest GNPA levels as of 9M
fiscal 2024
Ticket Size-wise GNPA (90+DPD) in %age

Less than Rs.
3.00% 3.60% 4.00% 4.02% 3.52% 3.10%
2.5 million
Rs. 2.5 to 5
2.72% 3.37% 3.88% 3.84% 3.32% 2.87%
million
Rs. 5 to 10
2.69% 3.64% 4.24% 4.40% 3.69% 2.98%
million
Rs. 10 to 20
2.68% 3.74% 4.56% 4.63% 3.79% 3.21%
million
More than Rs.
3.34% 4.29% 5.40% 5.63% 4.71% 3.74%
20 million
Region wise GNPA in LAP Finance segment as of 9MFY24
Region-wise GNPA (90+DPD) in %age

Region FY19 FY20 FY21 FY22 FY23 9M FY24
Urban Region 2.92% 3.73% 4.52% 4.57% 3.93% 3.35%
Semi-Urban Region 3.21% 4.14% 4.48% 4.59% 3.46% 2.79%
Rural Region 3.58% 4.70% 5.42% 5.74% 4.60% 3.48%
Others 2.51% 3.01% 3.04% 2.91% 2.43% 2.03%
Key factors driving competitiveness of HFCs in the LAP portfolio

Housing finance companies had the substantial market share among players in the loan against property
portfolio segment during fiscal 2023, and have been able to maintain their share in the total market owing
to various metrics in which HFCs have proven to be better than other players:
• Faster processing time in loans as compared to peers

• HFCs offer flexible repayment terms on LAPs as compared to other players
73
• HFCs have higher on-ground knowledge and a better understanding of the real estate market as
compared to other peers, giving them a competitive edge among peers
• HFCs also have a higher expertise in underwriting the informal segment along with borrowers with
no or limited credit information along with a focused underwriting process
• Higher degree of digitization during loan origination to disbursement process
With increase in data availability and enhanced use of technology and experience gained across several
cycles while lending to the same customer segment, lenders have increased focus on the underserved
MSME segment. This has led to a continued increase in share of relatively smaller ticket size secured
MSME loans in the overall lending pie. Going forward, LAP market will see continued growth aided by
increasing lender focus and penetration of such loans, enhanced availability of data increasing lender
comfort while underwriting such loans, enhanced use of technology, newer players entering the segment,
and government’s continued support to enhance MSME lending
NBFC/HFCs Profitability in LAP improved in Fiscal 2024

NBFCs in LAP segment operate with yield in the range of 15-16%, on an average. With average cost of
funds being in the range of 9-10%, net interest margins (NIMs) for this segment are in the range of 5-7%.
CRISIL MI&A estimates the profitability in this segment to have increased in Fiscal 2024 owing to improving
credit costs and improved asset quality.
Profitability of LAP financing NBFCs (FY2024)
2-3%
1%
7% 1%
2-3%
NIMs Opex Credit Cost Tax RoA
Source: CRISIL MI&A; Profitability estimated for FY24.
Key Risks in the Overall LAP Loan Industry
Insufficiency of data for credit appraisal and Collateral Fraud: Credit-score availability in India is still at
a nascent stage despite the presence of credit bureaus. In several cases, borrowers lack a formal proof of
income documents. This makes it difficult to judge the ability of the borrower to repay. In the LAP loan
industry, critical risks include the borrower's creditworthiness and income stability, potential documentation
and processing errors, and fraud. Additionally, borrower-specific issues such as business downturns can
affect repayment capacity. Effective risk management strategies involve thorough credit assessments,
robust operational controls, and comprehensive borrower evaluations to minimize these.
74
Economic, Interest rate and Property-related risks: In the LAP loan industry, significant risks encompass
property-related issues such as overvaluation, legal disputes related to unclear titles or ownership issues
complicating loan recoveries, and market value fluctuations affecting the collateral’s value, impactive the
loan to value (LTV) ratio, along with interest rate variability affecting repayment capacity. Economic factors
like downturns and sluggish real estate markets also pose threats. Effective risk management requires
accurate property valuation, legal due diligence, monitoring interest rates, and staying attuned to economic
conditions.
75
Overview of Real Estate Financing and Lease Rental
Discounting
NBFC’s Real Estate Financing Credit book to change direction owing to increasing
developer’s penetration in the Indian market
Over the past few fiscals, non-banking financial companies’ (NBFCs) lending to the real-estate sector has
undergone a considerable change in terms of size, complexity, and interconnectedness with the financial
sector. Majority of housing finance companies (HFCs) are downsizing their real-estate portfolios due to
asset quality concerns, but few are actively expanding and have been able to do well owing to prudent
credit quality and monitoring, diversified portfolio books and quality customer sourcing strategy.
In recent years NBFC’s real estate financing credit book to change directions owing increasing developer’s
penetration in the Indian markets. In the top 10 residential real estate cities, during fiscals 2021-23, the
overall unsold inventory level continued to decline sequentially. Developers were restricting new launches
during Covid year (FY21) and were cautious even during FY22. In post-pandemic environment where hybrid
mode of work is established, consumer preferences have pivoted towards larger and bigger configurations
in premium housing projects. In sync with this trend, large established developers have also gradually
aligned their new launches to premium projects.
Top residential markets witnessed strong momentum in the past few fiscals supported by sustained
economic growth and continuation of hybrid working models, growth is expected to continue in FY25
primarily due to necessity for larger living spaces and an enhanced lifestyle, catalysed by the pandemic.
Rising supply of housing projects helped in housing sales revival post pandemic
Top 10 Cities FY21E FY22E FY23E FY24E FY25P
New Launches (No of Projects) 107 197 281 342 377
Total Inventory (No of Projects) 918 961 1,016 1,074 1,122
Demand (No of Projects) 154 226 284 322 341
Unsold Inventory (No of Projects) 763 734 731 745 780
Unsold Inventory as a % of Total Inventory 83.1% 76.4% 72.0% 69.4% 69.6%

Note: Top 10 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Ahmedabad, Kochi, Chandigarh, Mumbai (MMR),
and Pune, E: Estimates, P: Projected
Source: CRISIL MI&A estimates
Rising supply and demand of commercial real estate projects expected to grow
The commercial real estate market is expected to grow and expand supported by the healthy growth of
Indian corporate and start-up ecosystem and their need for office space, strong office leasing trend and
76
advent of the global capabilities centers (GCCs) of the multinationals. The overall supply and demand in
the top 7 cities are expected to reach 59.1 million square feet (msf) and 56.8 million square feet (msf)
respectively in fiscal 2025.
Demand for commercial real estate to reach 59.1 msf in fiscal 2025
100.0
54.5 52.5 59.1 56.8
44.4 38.4 47.2 46.9
50.0 34.5 30.1
-
FY21E FY22E FY23E FY24E FY25P
Supply/ Completions (msf) Demand/ Net leasing (msf)
Note: Above numbers are for top 7 cities which account for more than 85% of commercial real estate in India, Top 7 cities include
Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai (MMR), and Pune
Source: CRISIL MI&A estimates
NBFCs were cautious in lending to both the corporate and real-estate sectors. NBFCs have reported a
decline in their lending to the segment, as they have been prioritising retail credit over wholesale lending.
Volatile asset quality driven by high ticket sizes is the primary reason why these NBFCs have been gradually
shedding their wholesale portfolios. Defaults in these loans result in elevated delinquencies, causing the
increase in overall gross non-performing assets (GNPAs) and asset quality deterioration. Another reason
is the risky nature of real-estate projects with high gestation periods. Consequently, wholesale, and real
estate segment focused NBFCs face higher borrowing costs, leading to contracted net interest margins
(NIMs) and return on assets (ROAs). Furthermore, over the last few fiscals, the real-estate industry has
struggled to make projects viable due to adverse market conditions such as the introduction of goods and
services tax for under-construction properties, labour shortage during the pandemic-driven lockdown and
the rising cost of raw materials. However, the real-estate industry now stands on a more stable ground, with
expectations of some unlocking in funding by NBFCs in fiscal 2025.
NBFCs' real-estate credit is estimated to have declined 5-6% in fiscal 2024
(Rs. Trillion)
2.00 18.3% 20.0%
1.50 1.67
1.55 1.51 10.0%
1.00 1.38 1.36 1.31 1.25
4.5% (3.5%) 0.0%
(7.0%) (6.5%) (5-6%) (2-4%)
0.50
0.00 -10.0%
Real Estate credit outstanding at NBFCs/HFCs (Rs. Tn.) YoY Change (%)
Note: Negative data points are mentioned in the brackets (). Data is of overall real-estate credit (residential and commercial) and is
excluding of lease rental discounting (LRD)
77
Source: Company reports, RBI, CRISIL MI&A
NBFCs real-estate lending declined to ~Rs 1.4 trillion in fiscal 2023 from ~Rs 1.6 trillion in fiscal 2019,
primarily due to asset quality stress aggravating from pandemic-led lockdowns as real estate industry was
already in considerable stress before Covid-19. This created periods of no activity and labour shortages,
leading to extended construction timelines and financing challenges. Although NBFCs were already facing
challenges related to tighter liquidity, riskier business models and asset liability mismatch resulting from
DHFL and IL&FS crisis, post which growth and asset quality levels of the sector deteriorated. However,
government interventions such as Real Estate Regulatory Authority extensions, low repo rates and reduced
stamp duties supported developers by providing the much-needed boost to keep construction projects
afloat. These concessions led to an improvement in sales, benefitting the entire ecosystem.
The pandemic and its aftermath accelerated the growth of affordable housing market, outpacing other
segments. This was fuelled by an uptick in affordable real-estate demand in Tier II and III cities. With a
young population demographic, major cities have been burdened to fill the supply-demand gap in housing
and commercial real estate. Since the pandemic has now subsided, demand for luxury and prime housing
is on the rise. Affordable housing demand, on the other hand, has moderated due to lower affordability
within the targeted segment. The traditional funding practices of developers included payments collected
at the time of property booking, construction-wise payments from customers or their lenders, developers'
own capital and bank or NBFC borrowings. Furthermore, sudden changes in economic and global
conditions have rendered projects volatile, elevating the risk of bankruptcies. To address this, the
Government of India has promoted a more diversified resource mix for developers, wherein they are
introduced to the capital markets to raise capital through real-estate investment trusts (REITs) as an
alternative financing source.
NBFCs' real-estate book plummeted 4% in fiscal 2023, driven by muted disbursements and lower exposure
of players to real-estate portfolios. With further downsizing of wholesale and real-estate lending books,
CRISIL MI&A Research believes NBFC funding for the real-estate segment contracted an estimated 5-6%
to Rs, 1.31 trillion in fiscal 2024. However, in fiscal 2025, the decline is expected to normalise to (2-4%) as
most of the portfolio transition by NBFCs is likely to have been completed. CRISIL MI&A expects NBFCs’
real estate book to reach Rs. 1.25 trillion in fiscal 2025.
Prior to the 2018 financial crisis, NBFCs had expanded their real-estate portfolios aggressively. However,
their portfolios have declined ever since. Only a select few NBFCs continue to expand their real-estate
portfolios, and the growth is marginal. . A vacuum was created, and banks seized the opportunity and
started expanding their position in the segment but few NBFCs/HFCs are actively expanding and have
been able to do well owing to prudent credit quality and monitoring, diversified portfolio books and quality
customer sourcing strategy. CRISIL MI&A expects NBFCs' real-estate credit to have declined an estimated
5-6% in fiscal 2024. Furthermore, funding is expected to stabilise in fiscal 2025 and lead to a marginal
decline of 2-4% as NBFCs look to exit the real-estate lending space and offload their major share of real-
estate exposure.
78
NBFC’s Commercial Real Estate Book (including Lease Rental Discounting) is estimated to grow
6-7% in fiscal 2025
(Rs. Tn.)
1.80 15.0%
1.60 9.9% 10.0%
5.9% 6-7%
1.40 5.0%
1.20
0.6% 0.0%
1.00
-5.0%
0.80
-10.0%
0.60
0.40 -15.0%
-19.2%
0.20 1.32 1.45 1.46 1.5-1.6 1.6-1.7 -20.0%
0.00 -25.0%
FY21E FY22E FY23E FY24E FY25E
Commercial Real Estate and Lease Rental Discounting credit outstanding at NBFCs/HFCs (Rs. Tn.)
Note: E: estimated. Data is of commercial real-estate credit and is including of lease rental discounting (LRD)
Source: Company reports, RBI, CRISIL MI&A
The rising real estate prices and a preference for asset-light business models drive the inclination towards
leasing over purchasing properties, particularly in sectors like Organised Retail and IT services. Leasing
shifts capital expenditure to operating expenditure, eliminating the need for long-term resource raising to
support corporate growth plans, in result driving the demand for lease rental discounting loan.
NBFCs commercial real-estate and lease rental discounting lending is estimated to have grown to Rs. 1.5-
1.6 trillion from the low of Rs 1.32 trillion in fiscal 2021 primarily driven by the momentum in lease rental
discounting portfolio of the NBFCs and HFCs. CRISIL MI&A expects the commercial real estate including
lease rental discounting credit book to reached around Rs. 1.6-1.7 trillion in fiscal 2025 clocking growth rate
of 6-8%.
Key Growth Drivers
Rise in urbanization to create demand for residential real estate in urban India : Urbanisation provides
an impetus to housing demand in urban areas as migrants from rural areas require dwelling units. In 2020,
about 35% of Indian population lived in urban areas of the country and this share of urban population is
expected to increase to about 40% in by 2030. This trend in urbanization has pushed the demand for
houses in urban areas.
Infrastructure development across India is driving growth in the real estate sector :The development
of infrastructure plays a key role in enhancing the demand for residential estate. Infrastructure development
leads to an increase in connectivity through railways, air, and road, reducing commute time. Well planned
transportation infrastructure attracts investments and business which further creates demand for
commercial and residential real estate. Also, other infrastructure development such medical facilities,
79
educational institutions, entertainment hubs, retail market, business centers, schools, retail outlets etc.
promote real estate prices as these infrastructure projects are the most preferred aspect for residential real
estate buyers.
Focus on integrated lifestyle especially by millennial buyers : Nowadays, residential real estate buyers,
especially millennials, have key preferences for their homes. These residential real estate buyers look for
work-life balance and seek residences which offer modern amenities, vibrant communities, and access to
leisure and entertainment options. They prefer integrated townships with gated communities which offer a
variety of amenities such as fitness centers, swimming pools, and recreational spaces. Due to this,
developers today are focusing on offerings to cater these lifestyle-based preferences, resulting in real estate
development projects for aspirations and dreams of millennial generation.
Asset quality
Real Estate sector has greater levels of stress than other segments
Overall stress in the real estate segment has remained higher than other segments. CRISIL MI&A estimates
the overall stress in the real estate book to be high as commercial real estate showed a deterioration in
asset quality. The GNPAs for of non-banks (including HFCs) has moderated marginally during fiscal 2023,
however, for few players the GNPAs are being on high double digit due to continued decline in real estate
book and no new disbursements. CRISIL MI&A estimates the overall GNPA to have remained on a higher
side at 10-12% during fiscal 2024.
Key Risks in the Overall Real Estate Financing Industry
Operational risk in project approvals and construction: Operational risks in real estate financing include
project delays due to legal issues, funding shortfalls, or logistical challenges, and construction risks such
as poor construction quality, labor shortages, and unreliable contractors. Effective project management,
regular monitoring, and contingency planning are essential to mitigate these risks and ensure timely project
completion.
Market and regulatory risks: In the real estate financing industry, market risks such as property price
volatility and demand-supply mismatches, combined with regulatory and compliance risks like frequent
policy changes and legal non-compliance, pose significant challenges. Also, the recent RBI draft guidelines
related to sharp increase in provision for standard assets to 5% for all ned and ongoing under construction
project loans, to have direct impact on cost of debt and limited impact on capital adequacy levels of NBFCs
and HFCs. Effective risk management requires market analysis, adaptive strategies, and strict adherence
to evolving regulations to ensure project stability and profitability.
80
Peer Benchmarking
Peer Comparison of Bajaj Housing Finance
For Peer Benchmarking, the following housing NBFCs were considered: Bajaj Housing Finance Limited,
LIC Housing Finance Limited, PNB Housing Finance Limited, Can Fin Homes Limited, Tata Capital Housing
Finance Limited, Aadhar Housing Finance Limited, Aavas Financiers Limited, Aptus Value Housing Finance
India Limited and Home First Finance Company India.
Bajaj Housing Finance is the second largest HFC with assets under management
of Rs. 913.7 billion as of fiscal 2024 and fastest growing HFC with CAGR of 29.3%
between fiscal 2020 and fiscal 2024
Bajaj Housing Finance is the largest non- deposit taking HFC (in terms of AUM) in India within seven years
of commencing mortgage operation.
As of fiscal 2024, Bajaj Housing Finance is the second largest HFC with Rs. 913.7 billion assets under
management after LIC Housing Finance (Rs. 2,868.4 billion assets under management). Bajaj Housing
Finance is the fastest growing HFC with 4-year CAGR (in terms of AUM) of 29.3% between fiscal 2020 and
fiscal 2024 among the peers for which data is available, followed by Can Fin Homes (14.0%) in prime
segment and Home First Housing (28.0%) in affordable player group. Bajaj Housing Finance also has the
highest total income CAGR growth of 30.3% between fiscal 2020 and fiscal 2024.
Size of the companies (FY24)
Total Total
AUM AUM AUM
Income Income
(Rs (Rs CAGR
Player Type Players (Rs CAGR
Billion) Billion) (FY20-
Billion) (FY20-
FY23 FY24 FY24)
FY24 FY24)
Bajaj Housing Finance Limited 692.3 913.7 29.3% 76.2 30.3%
Can Fin Homes Limited 315.6 350.0 14.0% 35.2 14.8%
Prime LIC Housing Finance Limited 2,750.5 2,868.4 8.0% 272.3 8.4%
PNB Housing Finance Limited 666.2 712.4 -4.1% 70.2 -4.6%
Tata Capital Housing Finance Limited 386.2 NA NA 51.9 14.6%
Aadhar Housing Finance Limited 172.2 211.0 16.6% 25.2 16.5%
Aavas Financiers Limited 141.7 173.1 22.1% 20.2 22.3%
Affordable
Aptus Value Housing Finance India Limited 57.6 67.6 20.7% 11.2 25.3%
Home First Finance Company India 72.0 97.0 28.0% 11.6 28.8%
Note: NA: Data not available. Data is on standalone basis
81
Bajaj Housing Finance is one the largest HFC (in terms of AUM) in India with an
AUM of Rs. 913.7 billion as of fiscal 2024 among other HFCs in NBFC-UL
The Reserve Bank of India (RBI) has identified 15 non-banking finance companies (NBFCs) for inclusion
in the Upper Layer (NBFC-UL) under Scale Based Regulations (SBR) for non-bank lenders. These
chosen NBFCs encompass a range of categories, including deposit-taking housing finance companies
(HFC), non-deposit-taking HFC, deposit-taking NBFC-ICC (Investment and Credit Company), Non-
deposit-taking NBFC-ICC, and core investment companies. Bajaj Housing Finance is a wholly owned
subsidiary of Bajaj Finance Limited, which is among India’s largest NBFCs, based on AUM (Rs. 3,306.2
billion), as of fiscal 2024.
Bajaj Housing Finance’ AUM has grown at a CAGR of 30.9% from fiscal 2022 to fiscal 2024 and was Rs.
913.7 billion as of March 31, 2024, making it fourth fastest growing HFC/NBFC as compared to other
“Upper Layer” NBFCs in India for which data is available. Bajaj Housing Finance is one of the largest
HFCs (in terms of AUM) in India with as AUM of Rs. 913.7 billion as of fiscal 2024.
AUM and Profit details for upper layer NBFCs (FY2024)

AUM AUM AUM AUM PAT PAT PAT PAT
(Rs (Rs (Rs CAGR (Rs (Rs (Rs CAGR
Players
Billion) Billion) Billion) (FY22- Billion) Billion) Billion) (FY22-
FY22 FY23 FY24 FY24) FY22 FY23 FY24 FY24)
Bajaj Finance Limited 1,974.5 2,473.8 3306.2 29.4% 70.3 115.1 144.5 43.4%
LIC Housing finance Limited 2,511.2 2,750.0 2868.4 6.9% 22.9 28.9 47.7 44.3%
Shriram Finance Limited 1,270.4 1,856.8 2248.6 33.0% 27.2 59.8 71.9 62.6%
Tata Capital Financial
Services Limited (Tata Capital 943.5 1,167.9 1577.6 29.3% 16.5 23.0 31.5 38.3%
Limited)#
Cholamandalam Investment
and Finance Company 769.1 1,065.0 1535.7 41.3% 21.5 26.7 34.2 26.3%
Limited
Tata Sons Private Limited 977.6* 1,191.7* NA NA 404.4 282.1 NA NA
Aditya Birla Finance Limited 551.8 805.6 1056.4 38.4% 11.1 15.5 22.2 41.6%
Mahindra & Mahindra
798.0 827.7 1026.0 13.4% 11.5 20.7 19.4 30.0%
Financial Services Limited
Bajaj Housing Finance
533.2 692.3 913.7 30.9% 7.1 12.6 17.3 56.2%
Limited
HDB Financial Services
614.4 700.8 902.0* 21.2% 10.1 19.6 24.6 56.0%
Limited
Muthoot Finance Ltd 644.9 715.0 890.8 17.5% 40.3 36.7 44.7 5.3%
L&T Finance Limited 883.4 808.9 855.7 -1.6% 10.7 16.2 23.2 47.2%
PNB Housing Finance Limited 669.8 666.2 712.4 3.1% 8.4 10.5 15.1 34.3%
Piramal Capital & Housing
finance Limited (Piramal 651.9 639.9 688.5 2.8% 20.0 99.7 -16.8 NM
Enterprises Limited)^
Indiabulls Housing Finance
722.1 670.2 653.4 -4.9% 11.8 11.3 12.2 1.7%
Limited
Note: (*) Data is of Loan assets, (^) Data is for Piramal Enterprise Limited as Piramal Capital and Housing Finance got merged. (#)
Data is for Tata Capital Limited as Tata Capital Financial Services Limited got merged, NA: Not Available, NM: Not Meaningful
82
Bajaj Housing Finance has second highest loan disbursement by HFCs in India
amounting to Rs. 446.6 billion in fiscal 2024
Bajaj Housing Finance has the second highest loan disbursal of Rs. 446.6 billion after LIC housing Finance
with loan disbursement of Rs. 589.4 billion in fiscal 2024.
Bajaj Housing Finance has the second fastest PAT growth of 42.4% between fiscal 2020 and fiscal 2024
among the peers after Tata Capital Housing Finance (65.7%).
Income and Disbursement of the companies (FY24)

Disburs Disburs Fee Fee
PAT PAT
ement ement Income Income
(Rs CAGR
Player Type Players (Rs (Rs (Rs CAGR
Billion) (FY20-
Billion) Billion) million) (FY20-
FY24 FY24)
FY23 FY24 FY24 FY24)
Bajaj Housing Finance Limited 343.3 446.6 1,382.3 8.4% 17.3 42.4%
Can Fin Homes Limited 89.5 81.8 331.7 30.3% 7.5 18.9%
Prime LIC Housing Finance Limited 641.2 589.4 491.2 5.7% 47.7 18.7%
PNB Housing Finance Limited 149.7 175.8 2,728.9 10.1% 15.3 22.3%
Tata Capital Housing Finance
173.4 NA 777.1 23.4% 11.5 65.7%
Limited
Aadhar Housing Finance Limited 59.0 71.0 1,111.6 22.4% 7.5 41.1%
Aavas Financiers Limited 50.2 55.8 867.1 27.1% 4.9 18.5%
Affordable Aptus Value Housing Finance
NA NA 312.1 31.3% 4.8 27.6%
India Limited
Home First Finance Company
30.1 39.6 99.3 26.8% 3.1 40.0%
India
Bajaj Housing Finance has highest share of salaried customer mix in home loan
portfolio amongst large HFCs as of March 31, 2024
Bajaj Housing Finance focuses on mass affluent clients with an average age of 35-40 years and with an
average annual salary of Rs. 1.3 million. Bajaj Housing Finance has the highest share of salaried customer
at 88% among the peers for which data is available.
Bajaj Housing Finance is focused on prime housing with higher average ticket size amongst large HFCs.
Bajaj Housing Finance has highest average ticket size of Rs. 4.6 million among the large HFCs for which
data is available.
GNPA, Loan to value, Customer Profile Mix and Average Ticket Size of Peers – Fiscal 2024
Gross Customer Mix (%) Averag
Loan to
Player NPA e
Players Value**
Type Ratio Salaried Self-Employed Ticket
(LTV) %
(%) Size (in
83
Rs
millions
)
Bajaj Housing Finance Limited 0.22% 70% 88% 12% 4.6
Can Fin Homes Limited 0.55% 61% 2
72% 28% 2.5$
Prime LIC Housing Finance Limited 4.41% 52% 88%3 12%3 ~2.9
PNB Housing Finance Limited 3.83% NA 61% 39% 2.9&
Tata Capital Housing Finance
1.55% 62%1 NA NA NA
Limited
Aadhar Housing Finance Limited 1.17% 59% 57% 43% 1.0
Aavas Financiers Limited 0.92% 55% 4
40% 60% 1.02*
Affordable Aptus Value Housing Finance India
1.15% <50%5 26% 74% <1.00^
Limited
Home First Finance Company India 1.60% 56% 68% 32% 1.15
Note: (**) LTV is for housing loan. “1” data is as of 9MFY24, “2” data is as of H1FY24,”3” Customer mix is basis the number of loans
“4” data is as of H1FY24,”5” Data is as of FY23 for the around 87% of the loan portfolio, (*) ATS for Housing Loan, (^) ATS for 93%
of the Portfolio, ($) ATS for Incremental Housing Loan, (&) data is for Individual Home Loan , NA: Data not available. Data is on
standalone basis
Bajaj Housing Finance is the most diversified HFC in India with offerings full suite
of mortgage lending products
Bajaj Housing Finance is the most diversified HFC in India with offerings full suite of mortgage lending
products with AUM mix of Housing loan (58%), Loan against property (10%), Lease rental discounting
(19%), Developer finance (11%) and other products (2%).
Product AUM Mix (%) for Peers (FY2024)

Player Type Player Product Category AUM Mix (%)
Housing Loan 58%
Loan Against Property 10%
Bajaj Housing Finance Limited Lease Rental Discounting 19%
Developer Finance 11%
Others 2%
Housing Loans 78%
Housing Commercial Real Estate 10%
Can Fin Homes Finance Limited Loan Against Property & Mortgage Loan 5%
Prime
Top Up Loans 2%
Others 5%
Individual Housing Loan 85%
Non-Housing Individual Loan 10%
LIC Housing Finance Limited
Non-Housing Corporate- Project Loans 3%
Non-Housing Corporate- Others 2%
Retail Loan 97%
PNB Housing Finance Limited
Individual Home Loan 72%
84
Retail Non-Housing Loan 28%
Corporate Loan 3%
Tata Capital Housing Finance Limited NA NA
Home Loans 75%
Aadhar Housing Finance Limited
Other Mortgage Loans 25%
Home Loans 69%
Aavas Financiers Limited MSME (Secured by mortgage) 17%
Other Mortgage Loans 14%
Home Loans 69%
Affordable
Quasi Home Loans 23%
Aptus Value Housing Finance Limited
Insurance Loans 4%
Top up Loans 4%
Housing Loans 86%
Home First Finance Company India Shop Loans 1%
Loan Against Property 13%
Note: NA: Data not available.

Bajaj Housing Finance is second most profit making HFC in India with strong
return on average assets and return on average equity for the fiscal year ended
March 31, 2024
Bajaj Housing Finance is the second most profit making HFC (Rs. 17.3 billion) in India with strong return
on average assets and return on average equity for the year ended March 31, 2024.
Bajaj Housing Finance has the second highest return on average assets (2.4%) for the year ended March
31, 2024, among the prime housing peers. Bajaj Housing Finance has one of the lowest credit costs (0.1%)
among peers.
Profitability parameters – Fiscal 2024

Leve
Yield Cost
PAT Cred rage
on PPo of Ope ROA ROA
Player (Rs. NII it (TA/
Players adva P fund x A E
Type Billio (%) cost TE)
nces (%) s (%) (%) (%)
n) (%) (time
* (%) (%)
s)
Bajaj Housing Finance 10.2 3.4 3.0 7.7 1.0 0.1 2.4 15.2
17.3 6.7
Limited % % % % % % % %
10.6 3.6 3.0 7.3 0.7 0.2 2.2 18.8
Can Fin Homes Limited 7.5 8.4
% % % % % % % %
9.9 3.0 2.7 7.4 0.4 0.6 1.7 16.3
LIC Housing Finance Limited 47.7 9.3
Prime % % % % % % % %
PNB Housing Finance 11.0 3.5 3.1 7.8 0.9 0.2 2.2 11.8
15.3 4.8
Limited % % % % % % % %
-
Tata Capital Housing 11.0 4.0 2.9 7.1 1.8 2.4 19.8
11.5 0.3 8.1
Finance Limited % % % % % % %
%
Aadhar Housing Finance 14.8 7.2 5.6 7.6 3.0 0.2 4.2 18.4
7.5 4.3
Affordabl Limited % % % % % % % %
e 13.6 6.1 4.3 7.5 3.6 0.2 3.3 13.9
Aavas Financiers Limited 4.9 4.4
% % % % % % % %
85
Aptus Value Housing 16.4 10.4 9.1 8.7 2.3 0.3 6.8 14.7
4.8 2.2
Finance India Limited % % % % % % % %
Home First Finance 14.5 6.5 5.2 8.3 2.8 0.3 3.8 15.5
3.1 4.5
Company India % % % % % % % %
Note: (*) Yield on advances is calculated on interest income. Data is on standalone basis
Profitability parameters – FY2023

Cos Levera
Yield Cre
PPo t of Ope ROA ROA ge
Player on NII dit
Players P fund x A E (TA/TE
Type advanc (%) cost
(%) s (%) (%) (%) )
es (%) (%)
(%) (times)
3.2 6.8 1.1 0.2 14.6
Bajaj Housing Finance Limited 9.6% 3.6% 2.2% 6.2
% % % % %
2.8 6.3 0.6 0.1 18.5
Can Fin Homes Limited 9.1% 3.3% 2.0% 9.1
% % % % %
2.1 6.9 0.4 0.7 11.2
Prime LIC Housing Finance Limited 8.6% 2.4% 1.1% 10.3
% % % % %
3.1 7.3 0.8 1.0 10.2
PNB Housing Finance Limited 10.3% 3.4% 1.6% 6.1
% % % % %
Tata Capital Housing Finance 3.2 6.6 1.8 0.1 19.5
10.9% 4.4% 2.3% 8.4
Limited % % % % %
5.0 7.0 2.7 0.3 15.9
Aadhar Housing Finance Limited 13.0% 6.3% 3.5% 4.5
% % % % %
4.7 6.6 3.7 0.1 14.2
Aavas Financiers Limited 12.6% 6.5% 3.5% 4.1
Afforda % % % % %
ble Aptus Value Housing Finance 11.2 9.8 8.3 2.4 0.5 14.5
16.9% 7.2% 2.1
India Limited % % % % % %
Home First Finance Company 5.3 7.3 2.9 0.4 13.5
13.3% 7.1% 3.9% 3.7
India % % % % %
Note: Data is on standalone basis
Bajaj Housing Finance has the lowest GNPA and NNPA amongst peers in fiscal
2024
As of fiscal 2024, Bajaj Housing Finance has lowest GNPA ratio of (0.27%) and NNPA ratio of (0.10%),
among large HFCs in India as of March 31, 2024. Bajaj Housing Finance also has the highest provision
coverage ratio (63.0%) amongst its peers as of fiscal 2024.
Capitalisation and asset quality – FY24

Capital Provision
Gross NPA Net NPA
Player Type Players adequacy Coverage
ratio ratio
ratio Ratio
Bajaj Housing Finance Limited 21.3% 63.0% 0.27% 0.10%
Can Fin Homes Limited 24.6% 48.8% 0.82% 0.42%
Prime LIC Housing Finance Limited 18.2% 50.8% 3.31% 1.63%
PNB Housing Finance Limited 29.3% 36.7% 1.50% 0.95%
Tata Capital Housing Finance Limited NA 57.9% 0.95% 0.40%
Aadhar Housing Finance Limited 38.5% 40.9% 1.10% 0.65%
Affordable
Aavas Financiers Limited 44.0% 28.7% 0.94% 0.67%
86
Aptus Value Housing Finance India Limited 66.8% 25.2% 1.07% 0.80%
Home First Finance Company India 39.5% 29.4% 1.70% 1.20%
Capitalisation and asset quality – FY23

Capital Provision Gross
Net NPA
Player Type Players adequacy Coverage NPA
ratio
ratio Ratio ratio
Tata Capital Housing Finance Limited 18.2% 59.4% 1.55% 0.63%
Affordable
Bajaj Housing Finance has the second highest AUM per branch (Rs. 4,249.8
million) and AUM per employee (Rs. 385.2 million) as of March 31, 2024, among
the large HFCs for which data is available
As of fiscal 2024, Bajaj Housing Finance has the second highest AUM per branch of Rs 4,249.8 million as
of Fiscal 2023 after LIC Housing Finance (Rs. 9,253.0 million) and the second highest AUM per employee
of Rs 385.2 million as of Fiscal 2023 after LIC Housing Finance (Rs. 1,194.7 million) among the players for
which data is available.
Distribution footprint and Productivity of Peers – Fiscal 2023 and Fiscal 2024
AUM/Employ
AUM/Branch
Branches Employees ee (Rs.
(Rs. Million)
Player Type Players Million)
FY2 FY2 FY2 FY2 FY2 FY2 FY2 FY2
3 4 3 4 3 4 3 4
3,32 4,24 248. 385.
Bajaj Housing Finance Limited 208 215 2788 2372
8.3 9.8 3 2
1,53 1,59 323.
Can Fin Homes Limited 205 219 976 NA NA
9.7 8.1 4
9,78 9,25 1,11 1,19
Prime LIC Housing Finance Limited 314 310 2462 2401
8.1 3.0 7.2 4.7
3,52 2,37 394.
PNB Housing Finance Limited 189 300 1690 NA NA
4.7 4.8 2
2,06 157.
Tata Capital Housing Finance Limited 187 NA 2445 NA NA NA
5.1 9
359. 403.
Aadhar Housing Finance Limited 479 523 3663 NA 47.0 NA
6 4
Affordable
409. 471.
Aavas Financiers Limited 346 367 6034 NA 23.5 NA
4 7
87
Aptus Value Housing Finance India 249. 258.
231 262 2405 2918 24.0 23.2
Limited 4 0
648. 729.
Home First Finance Company India 111 133 993 1249 72.5 77.6
5 2
Cost and Opex for Peers -- Fiscal 2023 and Fiscal 2024
Cost to Income Ratio Opex (%)
FY24 Players
FY23 FY24 FY23 FY24
Tata Capital Housing Finance Limited 35.9% 38.3% 1.8% 1.8%
Affordable
Bajaj Housing Finance has the highest possible credit ratings in India for both the
long-term as well as short-term borrowings programme
Bajaj Housing Finance has the highest possible credit ratings in India for both the long term (CRISIL
AAA/stable and IND AAA/stable) as well as short term (CRISIL A1+ and IND A1+) borrowings
programme.
Credit Ratings of Players (FY2024)

Player Type Players Credit Rating
Bajaj Housing Finance Limited IND AAA, CRISIL AAA
Can Fin Homes Limited ICRA AAA, CARE AAA
Prime LIC Housing Finance Limited CRISIL AAA
PNB Housing Finance Limited IND AA+, ICRA AA+, CARE AA+
Tata Capital Housing Finance Limited CRISIL AAA
Aadhar Housing Finance Limited IND AA
Aavas Financiers Limited ICRA AA, CARE AA
Affordable
Aptus Value Housing Finance India Limited ICRA AA-, CARE AA-
Home First Finance Company India IND AA-
88
Borrowing Mix of Players (FY2024)
Borrowing Mix
Player
Players Term Commercial
Type NCD/Bonds NHB Others
Loan Papers
Bajaj Housing Finance Limited 51% 35% - 10% 4%
Can Fin Homes Limited 59% 17% 7% 16% 1%
Prime LIC Housing Finance Limited 34% 52% 5% 4% 5%
PNB Housing Finance Limited 40% 10% 6% 9% 35%
Tata Capital Housing Finance Limited NA NA NA NA NA
Aadhar Housing Finance Limited 55% 20% - 25% -
Aavas Financiers Limited 48% 9% - 20% 24%
Affordable
Aptus Value Housing Finance India Limited 63% 5% - 24% 8%
Home First Finance Company India 62% 3% - 18% 17%
Note: NA: Data not available Data is on standalone basis
ALM Position of Players (Fiscal 2023)

Asset-Liability
Asset (Rs. Bn) Liabilities (Rs. Bn) Net (Rs. Bn)
Play Ratio*
er Player Within Within Within Within
After 12 After 12 After 12 After 12
Type 12 12 12 12
Months Months Months Months
Months Months Months Months
Bajaj Housing
43.3 603.3 124.2 417.3 -80.9 186.0 34.8% 144.6%
Finance Limited
Can Fin Homes
35.7 295.0 105.7 225.0 -70.0 70.0 33.7% 131.1%
Limited
Prim LIC Housing Finance
211.5 2,572.6 918.8 1,594.3 -707.3 978.3 23.0% 161.4%
e Limited
PNB Housing
92.7 575.3 234.4 324.1 -141.7 251.2 39.6% 177.5%
Finance Limited
Tata Capital Housing
105.5 301.1 102.0 256.0 3.6 45.1 103.5% 117.6%
Finance Limited
Aadhar Housing
36.3 129.8 30.2 99.0 6.1 30.8 120.3% 131.1%
Finance Limited
Aavas Financiers
Affor 33.9 100.2 16.8 84.6 17.1 15.6 201.4% 118.5%
Limited
dabl
Aptus Value Housing
e 10.5 55.8 7.4 27.7 3.0 28.1 140.4% 201.3%
Finance India Limited
Home First Finance
14.4 53.0 11.6 37.6 2.8 15.4 123.8% 141.0%
Company India
Note: * Asset to liabilities ratio is calculated by dividing the percentage of assets maturing in the specified period by percentage of
liabilities maturing at the same time. Data is on standalone basis.
89
List of formulae
Parameters Formula
RoAA Profit after tax / average of total assets on book
RoAE Profit after tax / average net worth
NII (Interest income – interest paid) / average of total assets on book
Yield on advances Interest earned on loans and advances / average of total advances on book
Cost to income Operating expenses / (net interest income + other income)
Leverage (TA/TE) Total Asset / Shareholders equity
Cost of borrowings Interest paid / (average of deposits and borrowings)
Operating Expenditure (Employee Expenses + Depreciation and amortization
Operating Expenses
expense + Fees and commission expense+ Other expenses) / average of total
(Opex)
assets on book
PPoP (Total Income – Interest paid – Opex) / average of total assets on book
Credit cost Provisions / average total assets on book
Debt to Equity Total Borrowings / Total shareholder equity of the same fiscal
AUM/Branch Asset under management / total number of Branches
AUM/Employee Asset under management / total number of Employee
90
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Analysis of Housing

Finance Market in India

Global economy is witnessing tightening of monetary conditions

India’s economy expected to grow at 6.8% in fiscal 2025

250 230-240 12%

Repo rate in India (%)

Consumer Price Index (“CPI”) inflation to average at 4.5% in FY25

Inflation to moderate to 4.5% in Fiscal 2025

CPI General Index (%)

Note: E = Estimated; P = Projected, Source: CRISIL MI&A

Macroeconomic outlook for FY25

10-year A moderate reduction in gross market borrowings to lower pressures on yields

Persistent efforts in fiscal consolidation aided by moderation in revenue spend

Positive government measures to aid economic growth for India

Key structural reforms: Long-term positives for the Indian economy

Key growth drivers

India has the world’s largest population

India’s population growth trajectory and number of households

1991 2001 2011 2021 2023E 2031P

Urban population as a percentage of total population (%)

Urban population as a percentage of total population globally

Increasing per capita GDP

capita Current Constant

Trend in Nominal GDP per capita (at current prices)

(In Rs. 000)

Source: MOSPI, IMF, CRISIL MI&A

Contribution of different sectors to India’s growth

Rs.138.8 Tn Rs.148.1 Tn Rs. 158.3 Tn Mining & Quarrying

14% 14% 15% Manufacturing

17% 18% 18% Public Administration, Defence & Other

Aspirational Indian population to help sustain growth for the country

212.5 217.4 208.7

Below Rs 0.2 million Rs 0.2 to 1 million Rs 1 million and above

Note: E: Estimated, P: Projected; Source: CRISIL MI&A

Financial Inclusion on a fast path in India

Number of PMJDY accounts Total balance in PMJDY accounts

(in billions) (in ₹ billions) 2,299

Source: PMJDY; CRISIL MI&A Source: PMJDY; CRISIL MI&A

Household savings as a percentage of GDP declined in FY22 and FY23

Household Savings (% of GDP)

Mar- Mar- Mar- Mar-

Household sector savings

Household sector savings

Gross financial savings (%

Savings in physical assets

Savings in the form of gold

Source: MOSPI, National Accounts Statistics, CRISIL MI&A

Household savings growth

(in Rs. Bn)

Physical assets still account for majority of the savings

Trend of household savings in India

31.0% 33.0% 28.5%

69.0% 67.0% 71.5%

Financial penetration to rise with increase in awareness of financial products

2001 2011 2018

Digitization to support economic growth and financial services

42% 40% 37% 36% 35%

58% 60% 63% 64% 65%

FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24P FY25P

Note: E: Estimated, P: Projected; Source: CRISIL MI&A