Aadhar Housing: Making people's dream true by offering facilitative home loans

One of the three basic needs of any native is having his or her own 'pucca home'. Fortunately, it has been one of the dream projects 'Housing for all' of the Prime Minister Mr. Narendra Modi. But the era where the other basic needs like food, education and health have become more expensive for a middle or low income group, thinking of having own home can be a mile stone. Affordable housing is making its way back into the real estate market in a big way, thanks to the initiative taken by the government, which has taken many initiatives. With a firm focus of completing Prime Minister Narendra Modi's dream project "Housing for All by 2022", few of home finance organizations are also playing a pivotal role to make people's dream comes true.

Aadhar Housing Finance Ltd. (Aadhar) is one of India's largest and pioneering affordable housing finance companies that have positioned itself strongly among very few reliable and comfortable financial institutions. Formerly known as DHFL Vysya Housing Finance Ltd., Aadhar is a subsidiary of Wadhawan Global Capital (WGC).  The company serves you the complete home financing needs of low Segment of India with quick loan approvals, where you don't face any unnecessary delay that hinders you from getting your housing loan.

Aadhar's dedication towards 'Housing for all' sets a new bench mark in the industry. In fact, the slogan 'Housing for all' has been a popular since the government announcement, but it was brought silently since 1984 when the company was founded by late Rajesh Kumar Wadhawan. Late Wadhawan's sole objective of providing home to every Indian looks like a dream which comes true. Taking forward the rigors of his late father, Shri Kapil Wadhawan, the Chairman of the group, founded Aadhar Housing Finance  in October 2010 with equity participation from International Finance Corporation (a subsidiary of the World Bank) to support the fulfillment of dreams of large financially excluded population with the central theme "Home Loan ab sabhike liye". This coincided with the report of the technical committee set up by Government of India in 2011 to ascertain the housing shortage. The Committee estimated a shortage of 18.78 Million houses in urban and 43.6 million in rural areas for 2012-2017.  More than 95% of the estimated shortage was in the economically weaker section and low income group.

Implementing home loan solution for each section of society is a challenge on account of various factors, which Aadhar is doing strongly by adopting customer centric approach rather than a traditional product centric approach. There are many other companies proving home loan to customer but what differentiates Aadhar from them is that it is acutely conscious of connecting with the customers with empathy, trust and transparency.  Aadhar is the only HFC in country which started its operations from less economically developed states, while others started from progressive states like Maharashtra, Gujarat, Tamil Nadu, Delhi and Rajasthan etc.

At Aadhar, the loan products are designed as per specific customer needs in different areas. To speak to the customers in their own language and to simplify the communication, voice messages are sent to existing and prospective customers in regional languages. The people at Aadhar believe in a financing process that is simple, transparent and speedy. Although their customers belong to the lower economic strata, their business model ensures that the customers have wider access to housing finance, ethically and responsibly. The customers get Best experience at every contact point in company.

Aadhar's reach almost throughout the country translates into a differentiated value proposition and stimulates time-to-market for clients. The company delivers comprehensive loan facilities to a long list of beneficiaries. For their working operations, Aadhar has the highest penetration amongst the affordable HFCs through its 275 branches in 19 states covering over 1500 spoke locations. Now talking towards the road ahead, the company plans to extend its reach to 2500 spoke locations this year through its dedicated sales force each covering a cluster spoke locations.

They carry out aggressive financial awareness/ financial literacy drives through unique marketing campaigns like Aadhar AawasMela, Aadhar ParamarshShivir etc.

Deo Shankar Tripathi, MD & CEO, Aadhar Housing Finance Ltd., in an exclusive interview with Abhishek Dubey- Senior Editor at The CEO Magazine

Why is it important for companies to innovate and invest in modern technologies?

In today's world, the adage of "Change being the only constant" is relevant like never before.  Technology is now no more only confined to transactions but it's all pervasive. While technology disruption has resulted in, customer reaches, process efficiency, employee efficiency, customer convenience, analytics, marketing and document management etc. Businesses that are unable to adapt technology in a nimble manner will suffer. In the fintech space, we see technology innovation as a business enabler and customer delight.  Be it speedier customer service or robust backend credit checks and processes, modern technology is here to stay. The investment in modern technology and continuous innovation is very important to remain relevant all the time.

At Aadhar, we are adopting technology to ensure that we can reach and service customers in a more efficient manner. Additionally, technology is helping us make more informed decisions vis-à-vis credit appraisals, loan recovery and tackling defaults in a defined manner.

We are constantly evaluating and implementing new age technologies that create an agile customer facing company and a robust risk and governance-led organization at the backend.

Why do companies struggle to innovate effectively?

In my opinion, you must create an organizational culture that is participative and flat to enable innovation and foster the germination of new ideas. At Aadhar, our relentless focus on customer excellence and an eco-system of listening have helped us become an organization where a lot of innovation happens regularly.

Innovation is not just about technology; it can be about service orientation, credit appraisal methods and trying to create a unique balance between old age wisdom and new age disruption.

The Aadhar business model of successfully creating a credit appraisal methodology to provide finance to sections of society that do not have traditional banking records or are part of the cash economy is one of the biggest innovations seen in the affordable housing finance space in India.

How much does your Company and you personally value the importance of workplace innovation?

This is an interesting question. Workplace innovation is always welcome and continuous process. On periodic basis, we keep on reviewing the efficiency of products and processes to fine tune to make them implementable and commercially viable. Any new product or process is first discussed with the stakeholders before launching, which automatically makes the products/ process acceptable.

As part of our participative culture, we also encourage all employees to share their ideas freely with regard to existing product, customer service, process and new things. These are deliberated and considered if found viable. The employees are also rewarded for their unique implementable ideas.

At Aadhar, we encourage workplace innovation that helps us reach the consumer in a fast yet economical manner. Our focus is to be able to service her/his needs during the entire period of the loan in a cost-effective and predictive manner.

What do you feel is the biggest challenge facing the housing finance sector in India?

Housing and Housing Finance both are interconnected activity when we discuss housing for all.

Over 95% of housing demand is from Economically Weaker section (EWS) and low income group (LIG). Substantially high portion of urban EWS/LIG working population, around 70%, is engaged in informal segment. In case of rural population this portion is much higher. This demand is not only confined to metros and large cities but also in tier 2, tier 3 and tier 4 cities as well; as small towns keep mushrooming on the main roads. Assessing and providing finance to informal segment is one of the challenges.

The challenges are both on the supply side and demand side. The demand side challenges are:

One; Affordability of beneficiary-This have largely been addressed by the 'Housing for all' scheme through credit link subsidy to eligible customers in EWS/LIG (Maximum 2.67 lac) and Middle income group (2.30 lac approx.), subsidy in case beneficiary construct house without loan, Reduction of GST from 12 to 8%, income tax exemption and stamp duty concession announced by few state government.

Two; lack of availability of finance is also broadly addressed with active participation from growing number of HFCs and banks. New HFCs do face problem to manage resources at reasonable cost as availability of refinance from NHB is insignificant and uncertain. The Government has announced in this budget to set up funds for affordable housing. Modalities of funds are yet to be announced.

The biggest challenge is on the supply side. Government has taken important initiatives ; income tax exemption till 2021 to builders for constructing affordable housing, infrastructure status to affordable housing to help builder to raise loans at low rates, Efforts by government to boost construction of affordable housing in partnership and also construction through government bodies.

Still, there is not enough supply of affordable houses at different locations. In metros and large cities, land is not available to provide houses at an affordable cost and at a commutable distance from the workplaces of low segment people. Approval process of building plan continues to be tedious process.

While Central Government has taken enough initiatives to encourage the builders to participate in affordable housing space but the full impact of this is yet to seen. In fact State Governments have to play very important role to augment supply of houses and creating conducive eco system.  In spite of prevailing constraints housing activities are gaining momentums as approximately 50% housing supply is through Self construction on owned or purchased residential plot across many locations and also construction by small builders in smaller town fulfill need to some extent.

What are the key opportunities in the affordable housing finance space in India?

There is huge opportunity in the affordable housing segment due to rapid urbanization, young demographic profile, shifting of rural people to nearby small towns and nuclearisation of family. As per reports, there is loan requirement of Rs 6 trillion by 2022 in this segment, which is likely to increase further. This requirement is largely from self-home users rather than investors. The government's housing for all 2022 scheme is a revolutionary step. The availability of credit linked subsidy under the scheme has improved the affordability of the low income segment aspirants, as well as availability of finance is big positives.

Industry participants estimate that USD 2 trillion investments are needed for the successful completion of 'Housing for All' by 2022. This is a big opportunity for the Indian economy as it will have a multiplier effect across the value chain including creation of employment, vast opportunities to housing finance companies (HFCs) to grow.

However, smooth execution and complementary efficiencies across reality players (supply), manufacturers (cement, steel, etc.) and HFCs to ensure ownership of all available inventory is the key to success of this opportunity.

On the local government and administration's part, making available of redevelopment land and land acquisition, approval of plans, civic infrastructure are key challenges. For HFCs in the affordable home finance space, understanding the earning cycle, credit behavior and culture of the LIG and EWS groups is the key to success.

How do you see India's economy panning out as compared to other economies around the world with special reference to recent events in the financial sector?

It is an exciting time to be part of the Indian economy. While geopolitical uncertainty across the globe is a reality, India with its democratic fabric, a strong financial regulatory ecosystem and a dynamic political leadership is in a 'sweet spot'. The effects of demonetization, GST and RERA have settled down. We are confident that the system will now be much cleaner, easier and transparent, and ultimately benefit the economic growth.

With a young population, India will benefit greatly from its demographic dividend. Today, almost 60% of India's population is in the working age group of 15-54, thereby giving an additional fillip to the economy to not only produce more but also drive consumption. With a significant floating urban population, Indian housing demand, especially in the affordable sector, will grow significantly. Indeed, HFCs have the right opportunity to create economic and social value in this journey.

The current events in the Indian financial sector, struggling Public sector Banks, if looked at in a neutral manner, are good in the long-term. It is not only resulting in the cleaning up of the books with realistic provisioning, but a genuine premium is being created for a healthy credit culture among all stakeholders. While we may feel a short-term pain or worry, in the long term it will further strengthen India's financial eco-system with better due- diligence and accountability.

What are your roadmap and future plans?

After the merger of Aadhar & DHFL Vyasa into Aadhar Housing Finance Ltd, our focus in FY19 is two-fold in terms of business goals. We plan to expand to two more states i.e. Himanchal Pradesh and Assam. During this year we also plan to open 60 new branches in all 21 states where Aadhar is present. These branches are planning to reach out above 2500 spoke locations through hub and spoke model. We expect our disbursements to grow by 60 % at 6000 Cr and loan book to grow by 50% to reach at 12000 Cr by year end. This growth will be achieved by addition of 75000 new customers with ticket size of 8 Lakh. The company is consistently focused on controlling delinquency to maintain NPA at 0.5%.

It is proposed to set up Central Processing unit for straight through credit process of salaried files to improve process efficiency and turnaround time.

In addition to these, host of digital initiatives are at implementation stage. The company also has plans to implement various skill development initiatives in association with National Skill Development Corporation India.

Overall, we see a momentous year ahead in terms of performance, additional reach and benefit from the synergies of the merger. Customers remain the key and central to our business. 

About the leader

Deo Shankar Tripathi, MD & CEO, Aadhar Housing Finance Ltd.

Deo Shankar Tripathi joined Aadhar Housing Finance Ltd. (Aadhar) as its CEO in January 2015. In December 2017, he was elevated as Managing Director and CEO of the company. He was President and Chief Operating Officer of DHFL effective May 2013 before taking up the mantle at Aadhar.

Mr. Tripathi brings over 38 years of commercial banking experience. He joined the Union Bank of India in 1977 as a Probationary Officer and has held diverse positions, managing varied portfolios before being elevated to the Top Executive Grade. He holds the distinction of heading the premier zones of Union Bank, namely Mumbai and New Delhi. His experience spans several locations across Uttar Pradesh as well.