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India will be able to double its home loans to around US$ 600 billion: Deepak Parekh

  • Jun 07, 2022, 12.15 PM
  • DealMoney News Service

India will be able to double its home loans to around US$ 600 billion within the next five years and this would coincide with the period when India attains its much-aspired goal of
being a US$ 5 trillion economy, stated Deepak Parekh, chairman of HDFC Ltd in his address to the shareholders.

Parekh added that Despite the doubling of housing loans, India’s mortgage penetration would still remain low at an estimated 13% of GDP.housing loans in India will have an exponential
growth trajectory for decades to come. 

"At HDFC, we know that this is the right time for strategic choices as we prioritise pathways for future growth. Our moment of truth is that the optimum path to scale up housing finance is to be housed within a banking structure. The pool of resources for lending will be significantly larger and at lower costs. From a regulatory perspective, it is prudent for all large providers of housing finance to operate on a level playing field, with the same rules. Globally too, the scale of mortgage assets is exponentially larger in banks compared to non-banking financial entities, added Parekh.

Parek further added, "Fortunately, between HDFC and HDFC Bank, there is a natural affinity. Financial and human capital is critical through a merger process, as is a lucid communication strategy on keydevelopments during this period." 

Parek added that the home loan market in India is estimated at slightly over US$ 300 billion, which represents a mortgage to GDP ratio of just 11%. 

Deepak Parekh, chairman of HDFC Ltd, stated that he expects the regulator’s view on the proposed merger with HDFC Bank to be fair and judicious while asking the stakeholders to be patient.

“At this juncture, we are awaiting regulatory guidance on the path forward. We remain respectful of all our regulators and are confident that the outcome will be judicious and fair at a systemic level,” Parekh said.

Parekh said that the favourable conditions like rising income levels, improved affordability and fiscal support augur well for the demand for homes. Real estate in India is on an upcycle.
Developers are now financially stronger and more disciplined.