Expect demand for home loans to remain strong for many years to come: Keki Mistry, HDFC

In a chat with ET Now, Keki Mistry, Vice Chairman & CEO, HDFC, talks about their performance and shares his business outlook. Excerpts:


ET Now: What has led to this amazing performance and opportunity in the housing finance space for you?

Keki Mistry: I have no idea what their criteria is and how they do the rating. But nonetheless, we are in a sector which has been growing well over the years. Let us hope we continue to do well.

ET Now: You have always consistently said that business is looking fine. How is the space looking to you right now? How do you think the business will shape up over the next couple of quarters?

Keki Mistry: Given the basic demographics in India, my sense is that the demand for housing will continue to remain strong for a number of years to come. And as the demand for housing remains strong, the demand for housing loans will also remain strong. As prices keep rising, people need to borrow money to put in houses.

The shortage of houses in India continues to be immense. But the penetration level of mortgage here is among the lowest in the world. The total outstanding housing loans are just 9% of India’s GDP. The corresponding number significantly higher both in the developed markets as well as other developing market.

In India, 60% of the population is below 30 years of age. Unlike the west, people here do not go and buy a house at a comparatively young age. The average age of home loan seekers here is between 35 and 38.

As 60% of India's population is below 30 years of age, a huge number of people will need housing over the next, say, 15 years and therefore, home loans. So, structurally the demand for housing in India will continue to remain strong. This particular fact gives us enough confidence that the outlook for this sector will remain strong for quite some time to come.

ET Now: Tell us what the years ahead look like for HDFC. The market has been keenly watching out for the listing of your insurance business. Is there any progress on that front?

Keki Mistry: As far as insurance is concerned, we have an agreement with Standard Life that we had the option to increase their stake up to a higher level. We are still discussing with them whether they should go all the way to that level, or restrict their shareholding to a lower level.

My sense is that the Standard Life transaction would happen first. After that transaction is over, we will look at filing for an IPO. I think 2016 is when we would look at listing for the insurance companies.

The time, however, is a little difficult to predict at this point, because there is a whole lot of processes that we need to go through in the foreign IPO.

Once the Standard Life transaction is completed, we will have to file the document with the IRDA, and then with SEBI. We can proceed only after we get the required approvals from them.