Aadhar Housing Finance: empowering Bharat to gain enhanced financial capabilities
Did you remember the famous Bollywood classic that talked about the basic human necessities; Roti, Kapda aur Makaan? Among these three, Housing is the most complex and requires a much larger pool of resources. Hence, came the need for an organized form of lending and borrowing. Housing Finance or the Mortgage lending Industry is one of the most important financial sectors of the economy and Housing is the indicator of the socio-economic status of the people. Though these words have a slightly different meaning, in mortgages, the collateral of fixed property is kept after making an individual eligible for loans, whereas, in Housing finance, the individuals qualify for borrowing by considering their income levels. The advent of the history of the global housing finance industry is due to the Industrial Revolution in Europe. Historically, the lending and borrowing industry has played a significant role in the rural economy, as the land was an important asset at that time. In India, the housing finance sector doesn’t have that long a history as home loans were not prevalent during the regulatory economy days and the mentality of the credit economy wasn’t much prevalent. People mainly relied on savings and other benefits for the purchase, and construction of the house. The very first case of home finance was witnessed in 1978. During the initial period of the opening of the economy, only the banking sector could render the home loans. In 2002, the government introduced SARFAESI (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act to provide teeth to the banks, in order to deal with Home loan defaults. These earnest efforts by the regulatory authorities paved the way for the growth of the home finance segment. Another turning point that disrupted the industry was the introduction of Non-banking Financial Services in housing finance.
Aadhar Housing Finance came into existence in 2010, filling the gaps left by banking entities following the vision of late Shri Rajesh Kumar Wadhawan, who envisioned every Indian to own a home. The current form of Aadhar Housing Finance is the by-product of the merger of DHFL Vysya Housing Finance (Estd. in1990) and Aadhar Housing Finance (Estd. in 2010). The firm is now one of the largest affordable housing finance companies in India serving the housing requirements of the low-income segment. The vision of Kapil Wadhawan (the Founder and Chairman) of Aadhar Housing Finance is no different from his father’s. He too has a vision of providing security in the form of a roof for every Indian.
Since the establishment, the firm empowered a large range of underserved Indians to have their own places of residence by mobilizing resources, providing novel finance solutions and making housing finance more accessible by creating awareness among the potential customers. The primary task of Aadhar Housing Finance [a subsidiary of Wadhawan Global Capital (WGC)] is to offer home loans for salaried and self-employed customers having formal or informal incomes. It also provides mortgage loan against property and attractive fixed deposit products. The firm is one of the few players that have a pan-India presence to provide financing solutions to all segments of customers whose monthly income window is between ₹ 5000 to ₹ 50,000 and above. The firm finds its key competitive advantage through values like empathy, trust, and transparency-led customer service and their customer-centric approach has helped them build a loan book of about a billion rupees. Today, the outreach of Aadhar Housing is more than 90% of the country’s population, and with around two-thirds of the population residing in the hinterland, the firm remains committed to their target group, i.e., serving home buyers from the low-income group. The firm believes in the basic values of the liberal tradition that everyone deserves the security of a home – from barbers, tailors, carpenters, plumbers, Kirana merchants to police, defense, and railway personnel, SMBs and the self-employed. No one should be left out. The firm fulfills its vision of a truly inclusive India by expediting financial inclusion through enabling wider access to housing finance, ethically and responsibly. The group has maintained its financing process simple, user-friendly, transparent and speedy while remaining committed to the highest benchmarks of ethical behavior and professionalism.
Our editorial team spoke to Deo Shankar Tripathi, the Managing Director, and CEO about the organization. Here are the edited excerpts.
Area of Expertise, Solutions and the Uniqueness of the firm
The Indian affordable housing finance industry is traveling and witnessing very interesting times following the launch of the grand scheme of housing ‘Housing for All Mission’ or the ‘Pradhan Mantri Awas Yojana.’ Apart from the scheme, the government introduced several reform-oriented initiatives and structural reforms such as granting infrastructure status to affordable housing and Real-Estate acts like RERA and indirect taxes like GST. Due to the consequences of these steps, many housing finance companies were set up to support the segment, and many developers too started affordable housing projects. Our key competitive advantage lies in the organizational strength, pan India presence, innovative credit appraisal process, the bouquet of product, a personalized approach backed with vast experience, and expertise of the group. Further, our ability to provide customers with ethical, risk-free, speedy, transparent services and our deep understanding of the housing financing needs of the neo-aspirational populace in urban and semi-urban markets has made us a trustworthy brand.
We have specially designed our unique business model to harness the large-scale affordable housing opportunities to reach out to its most underserved – the low-income segment. We have been continuously engaged in awareness generation programs combined with the personalized service, enabling us to become the leaders in India’s housing finance sector for the LMI and EWS segment. Our main strategy of home financing is ensuring repayment capabilities, not the income levels. In order to remain committed to our fundamental value, we have kept the minimum income eligibility criteria as low as ₹ 5,000.
Customers’ percipience of the Brand
We always believe in communicating with our target group about our approach, ability to understand their need and rendering the appropriate financial solution for their housing needs. Our satiated customer, dedicated staff, comprehensive portfolio of products and technological integration have strengthened the brand “Aadhar.” We enhanced the customer experience through quick sanctions and disbursals, simplified assessment procedures with minimum documentation, flexible and easy loan terms and affordable interest rates. In simple words, the customers perceive Aadhar as someone that helps in making their dream of homeownership a reality; aptly described by our new punchline “Ghar Banega toh Desh Banega.”
The challenges faced by the firm
The firm came into existence after the catastrophic Subprime mortgage crisis of 2007. The biggest challenge facing India’s housing finance sector is paradoxically also its biggest opportunity. Fulfilling the government’s ambitious mission of universal home ownership by 2022 is in itself a daunting task for any single enterprise. In spite of the influx of new housing finance companies, the segment remains largely underpenetrated. Recent statistics reveal that only three lakhs have been constructed under the urban quota out of the target of 40.6 lakh houses, revealing the challenges on the supply side. However, the Government implemented several initiatives to improve supply through affordable housing in partnership and beneficiary lead construction. The success of the mission depends on enabling participation through awareness creation in the informal communities. And we are well-positioned to harness the opportunities that the future holds for us.
The Clientele and fostering long-term relationships
Our business strategy focuses on mainstreaming informal communities through financial inclusion and encouraging financial literacy along with it. Low financial literacy is a barrier that impedes their dreams of home ownership and prevents from improving the standards of living. We conduct low-cost high impact initiatives like ‘Aadhar Parichay,’ ‘Aadhar Sanyog’ and ‘Aadhar Paramarsh Shivir,’ to connect with informal communities at an intellectual and emotional level. These interactions provide our customers with insights about the significance and benefits of various financial instruments and assist in solving their specific problems. Last year alone, we conducted more than 7,000 drives generating 17,000 leads and touched around 1 lakh people. We also conduct Aadhar Awaas Melas exclusively for the LMI segment. These initiatives bring customers, property developers, legal and technical experts, and branch home loan teams under one umbrella to provide end-to-end solutions to customers. During the last year, we conducted six such exhibitions across the states of Gujarat, Madhya Pradesh, and Maharashtra.
Bursting the Myth of Sisyphus
We strongly believe in our motto Employee First-Customer First. We carry out various employee engagement programs, financial and non-financial reward, and recognition programs for our team of 2000+ employees. The organizational culture finds its roots in the values of commitment, collaboration, and compassion. I believe that the team finds its motivation from the scale of the mission and the significance of its success in the lives of our customers. Together, we are fostering a culture of excellence, quality and customer delight and moving towards the singular mission of enabling universal home ownership for Indians.
Achievements and the Recognition
After the merger of Aadhar and DHFL Vysya Housing Finance in 2017, a new Aadhar was born. Aadhar was already a well-established brand in North, West and East India, DHFL Vysya had a strong foothold in South India. This integration created a stronger Aadhar with better economies of scale, uniform acquisition structure, common policies, strong business growth, and cost reduction and further enabled the firm to scale our efforts at a pan-India level to democratize home financing across the country. Due to this integration, last year we crossed the 100,000th customer milestone. Further, the sanctions by the company saw an increase of 83% while the asset under our management (AUM) increased by 58 %, reporting a retail gross NPA of 0.58% and a 56% increase in PAT during the last fiscal. As a result, the cost to income risk reduced from 55% in March 2017 to 44% in March 2018 with the aim of bringing it down further in the next few years.
These figures are the testament to our best-in-class services and the high levels of trust that our stakeholders place in our abilities.
The Road Ahead
For the coming years, we are focused on the growth momentum of the loan book and maintain low levels of NPA. We plan to add one or two states to our operational framework and reach out to smaller towns and cities which are the nucleus of our target audience which will be catered by resident executives without physical branch setup and ‘Aadhar Mitra.’ Aadhar Mitras will be our business partners comprising of the unemployed youth and small entrepreneurs using technology and digitization enabling a more cohesive customer experience. We will maintain our delinquency rates by stringent credit appraisal strategy which carefully assesses the credential of every individual customer. To add more skilled professionals in our industry, we started a skill development program “Aadhar Kaushal” to train unemployed skilled and educated youth through skill development training partner accredited with National Skill Development of India. Later these trained professionals will be incorporated into various NBFCs/HFCs including ours. Our branch numbers are expected to go up to 315 covering 2500 locations in 22 states and Union Territories with Assam and Himachal Pradesh as new additions.
The Guides of the firm
Deo Shankar Tripathi, a post-graduate in Chemistry from Lucknow and a certified Associate of Institute of Bankers joined Aadhar Finance as its CEO in Jan 2015. He was later elevated to the position of Managing Director and CEO of the company in December 2017. Prior to Aadhar, he served as the President and Chief Operating officer of DHFL. Mr. Tripathi is an industry veteran with 38+ years of experience in commercial banking. He started his career with Union Bank of India as a Probationary Officer managing varied portfolios and reached the Top Executive Grade heading the premier zones, namely Mumbai and Delhi. His wealth of experience spans several locations across Uttar Pradesh as well. During his long span of the career, Deo worked in varied domains covering Corporate Finance & Credit Management, Retail Banking, NPA Management, Rural Banking, Resources Mobilisation, Customer Relationship Management, Branch Network Expansion, and HR Management. He is a Guest Speaker at various forums and attended various management programs in the leading institutions across India and overseas.
Chief Business Officer
Rishi Anand an alumnus of IIM Kozhikode assumed the role of Chief Business Officer at AHFL in April 2018. He started his career with front-end sales and soon rose to the heights across sales, marketing, product, and property services with key mortgage institutions in the country. Before AHFL, Rishi worked for DHFL as the Business Head. His current responsibilities at AHFL is looking after Retail Housing Finance, Project Finance, Retail Liability, Product and Marketing. Rishi has over 20 years of experience in the financial industry. His expertise lies in the development of mortgage models, processes and policies for companies operating across geographies. Other than DHFL, Rishi has worked as Business Leader – Mortgage and whole time Director at AIG HFIL, Reliance Capital Consumer Finance as Zonal Head, National Sales Head with BHW Home Finance Limited – A Deutsche Post Bank Company and Regional Head North and East India for the home equity and home loans product line of GE Money.
Chief Financial Officer
Anmol Gupta joined Aadhar as the Chief Financial Officer (CFO) in April 2017. A Charted Accountant by profession, Anmol possess 20+ years of experience. Prior to AHFL, Anmol worked for DHFL as the head of corporate planning and controlling function. Other than DHFL he also worked for institutions like Deutsche post-bank home finance and BHW home finance at key positions within the finance domain, accountable for strategy, planning, accounting, taxation, and finance.
Chief People Officer
Hrishikesh Jha, a Post Graduate in Personnel Management and Industrial Relations from XLRI, Jamshedpur (2002) and a graduate in Physics from St. Xavier’s Ranchi (1999) joined Aadhar as the Chief People Officer (CPO) on 9th March 2018. His 16 years in the Human Resources domain within the Banking and Financial sector made him proficient in various facets of Stake-holder Management, Turnaround Strategy, Customer Experience, and Process Excellence. His last stint had been with L&T Finance Holding where he was the Group Head- Corporate Human Resources. He also worked with Barclays Capital & Wealth and ICICI Bank where he has been in leading roles within the HR function.
Chief Operating Officer
Ravinder Singh Beniwal, a science graduate and management professional from Michigan, Ross School of Business and Wharton, University of Pennsylvania rich experience of twenty-five years in business, large-scale operations and customer service in both NBFCs and banks and in-depth understanding of retail asset operations, P&L management, collections, strategy, distribution and digitization brought him to the door-steps of Aadhar as COO. Prior to Aadhar, he worked for Aditya Birla Payments Bank as President and Head of Retail Banking, and before that, he served ICICI Bank, Max New York Life Insurance and Hinduja Corporation.