LIC Housing Finance recovers Rs.553 crore from retail portfolio in Q2, targets 14-15% growth in disbursements

NEW DELHI, Nov. 3 -- LIC Housing Finance Ltd (LIC HFL) recovered Rs.553 crore from its retail portfolio during the September quarter, while another Rs.84 crore was recovered from written-off accounts as the lender stepped up efforts to improve asset quality and bring its gross non-performing asset (GNPA) ratio down to 1.9% by the end of FY27.

Managing director and chief executive officer Sandeep Kumar said some large-ticket cases were also in the pipeline for resolution in the December and March quarters, which could support the company's bottom line.

The company's GNPA ratio stood at 2.05% as of 30 September, compared with 2.51% a year earlier and 2.14% at the end of the June quarter.

"We are very confident that we will surpass the figure of 1.9% by the end of the year," Kumar said in an interview.

LIC HFL is looking to increase annual disbursements to Rs.73,000 crore-75,000 crore in FY27. Kumar said the company was targeting 14-15% growth in disbursements, supported by higher retail and project lending and a renewed focus on customer retention.

It has started approaching existing borrowers before they transfer their loans to other lenders, with the initiative expected to contribute to growth in the second half of FY27.

Kumar said project loan disbursements had increased 149% during the first six months of FY27, with the company targeting Rs.4,000 crore for the full year, compared with Rs.1,900 crore in the previous financial year. He expressed confidence that the company would exceed the target.

LIC HFL is changing its project-financing strategy to include smaller projects, particularly in tier-II and tier-III cities, with ticket sizes of Rs.100 crore. The company is being selective in its underwriting, having tightened parameters in response to past asset-quality challenges.

The company's outstanding loan portfolio increased 5% year-on-year to Rs.3.26 trillion as of 30 September, while disbursements during the quarter rose 11% to Rs.18,127 crore. Retail loans grew 4%, while the project loan portfolio increased 12% year-on-year.

The company crossed Rs.3.2 trillion in assets under management, with Kumar targeting an increase to Rs.3.5 trillion during the current financial year.

The lender is exploring opportunities in lease rental discounting, loans against property and other non-housing lending segments to improve yields and diversify its portfolio. However, Kumar said there are no plans to exit any existing businesses or shift its primary focus away from retail housing finance.

Kumar acknowledged that rising borrowing costs and global uncertainty were creating challenges for lenders. LIC HFL reported a net interest margin (NIM) of 2.58% in Q2, compared with 2.62% in the corresponding quarter last year.

Its incremental borrowing cost stood at 6.91%, while the cumulative cost was 7.29%. The company increased its lending rates by 25 basis points, taking its best available home-loan rate for prime customers from 7.15% to 7.40%.

Kumar said the company would continue competing with banks through pricing and new product offerings, while maintaining its annual NIM guidance of 2.5-2.6%.

LIC HFL has adequate assets against its loans to companies linked to Essel Group founder Subhash Chandra, with no cause for concern for shareholders, Kumar said.

The lender filed a complaint of alleged fraud against Chandra with the Central Bureau of Investigation (CBI). Chandra had provided personal guarantees for two loans aggregating Rs.980 crore extended to Essel Group-linked companies in 2018, Kumar said.

"We have, in fact, filed a case against the guarantor. That case is with the CBI. I don't want to comment much upon that because it is already under the purview of the agency. But whatever money we have lent to that group company, we have equivalent assets with us. There is nothing to worry about from the perspective of shareholders," Kumar said.

One loan of Rs.500 crore was given to Vasant Sagar Properties Pvt Ltd, with Pan India Infra Projects Pvt Ltd as co-borrower, and another was a Rs.480 crore facility to Digital Subscriber Management and Consultancy Services Pvt Ltd, with Spirit Infra Power and Multi Ventures Pvt Ltd as co-borrower.

Chandra provided personal guarantees for both facilities, which subsequently turned non-performing. The loans were granted on the basis of net worth certificates submitted by Chandra.

The Directorate of Enforcement (ED) registered a case under the Prevention of Money Laundering Act (PMLA) against Chandra on 2 November, based on a CBI FIR arising from LIC HFL's complaint. The agency is examining allegations that inflated net worth certificates were used to secure the loans. LIC HFL's admitted claim in Chandra's personal insolvency proceedings stood at Rs.1,322.39 crore, reflecting the higher outstanding amount.

However, LIC HFL maintains that it continues to hold and enforce its security interests over the assets charged against the facilities. It clarified that the case against Chandra as a personal guarantor does not discharge or dilute the liabilities of the principal borrower companies.