LIC Housing Finance to boost loan business project in FY2023

With the real estate cycle improving, LIC Housing Finance plans to boost project finance lending and increase the percentage of such disbursements from 5% to 10% in the fiscal year (FY) 2022-23.

Project loan activities were not fully operational in the first half of FY 2021-22. In the second part of FY22, the firm was also affected by the Covid-19 third wave. The business environment is now clear.

Existing projects may be subject to a cash withdrawal. A pipeline of projects worth over Rs 1,000 crore is also being evaluated.

Project loan disbursements fell to Rs 428 crore in the reporting period ending March 31, 2022, from Rs 1,197 crore in the fourth quarter of (Q4FY) 2020-21.

On March 31, 2022, the project credit portfolio was Rs 12,978 crore, down from Rs 15,956 crore on March 31, 2021.

Its overall disbursements in Q4FY22 were Rs 19,315 crore, compared to Rs 22,362 crore in the same quarter of FY21. Furthermore, disbursements in the individual house loan category totalled Rs 16,341 crore in Q4FY21, compared to Rs 19,010 crore in the previous quarter.

According to Y Viswanatha Gowd, managing director and chief executive officer, LIC Housing Finance, this year will be significantly better. Despite the prospect of rising interest rates, the country's economic outlook is significantly brighter than it was in FY21 and FY22.

In FY23, a 15% increase in disbursements is expected. From Rs 2.32 trillion a year earlier, the total outstanding portfolio increased by 8% to Rs 2.51 trillion by March 2022 end.

Individual home loan portfolios increased by 13% to Rs 2.04 trillion as of March 31, 2021, from Rs 1.8 trillion.

The shift in the real estate cycle has improved the environment for resolving projects with execution and cash flow issues. It was able to recover Rs 350 crore in non-performing assets (NPAs) in the builder and high-value loan segments in the fourth quarter.

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