HDFC merger: Home loan market will double, HDFC merger will help expand business: Chairman Deepak Parekh

India will be able to double its housing lending to around $600 billion over the next five years as the aspiration to own a home will only increase and the merger with HDFC Bank will help Housing Development Finance Corp Ltd ( HDFC) to expand its business. , Chairman Deepak Parekh said in his annual address to shareholders.

“At HDFC, we know this is a good time to make strategic choices as we prioritize pathways for future growth. Our moment of truth is that the optimal pathway to expand housing finance must be hosted 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 major housing finance providers to operate on a level playing field , with the same rules. Globally also, the scale of mortgage assets is exponentially larger in banks compared to non-bank financial entities,” Parekh said explaining the reasons for the merger with its banking subsidiary announced in early April.

Parekh said India’s mortgage market is estimated at just over $300 billion, with a mortgage-to-GDP ratio of just 11% currently, but favorable conditions like rising income levels, improving accessibility and tax support bode well for housing demand. .

“Real estate in India is on a bull cycle. Developers are now financially stronger and more disciplined,” he said, adding that despite the likely doubling of housing loans, mortgage penetration in India would remain still low, at around 13% of GDP.

“Now is the time to ask ourselves, what will it take for India’s mortgage-to-GDP ratio to rise above 20% and beyond? When looking at comparable Asian economies, average mortgage-to-GDP ratios vary between 20 and 30% This implies that housing loans in India will experience an exponential growth trajectory for decades to come,” he said.

Parekh said that

is confident that the regulators’ outcome “will be sound and systemically fair”.

He asked the company’s stakeholders to be patient. “My only request to our stakeholders is your patience as we navigate the complexities of this transaction. More than ever, we need your trust and support,” Parekh said.

Priscilla C. Carnegie