With eye on innovation, PNB Housing plans to launch a LAP vertical in 2025: Girish Kousgi

In an exclusive conversation with Adgully, Girish Kousgi, MD & CEO, PNB Housing Finance, shares comprehensive insights into the company’s strategic approach to affordable housing through its flagship vertical, Roshni. Introduced as a dedicated business unit, Roshni underscores PNB Housing’s commitment to addressing India’s growing affordable housing demand.

With a robust plan in place, Roshni’s growth trajectory emphasizes branch expansion, yield optimization, and a balanced focus across various risk segments. By leveraging its nationwide presence and over 35 years of expertise in the mortgage industry, PNB Housing is redefining its market approach, particularly in the affordable and emerging segments.

Key highlights of the strategy include a phased increase in affordable housing branches, targeted business segmentation across low-, medium-, and high-risk categories, and a structured focus on both salaried and self-employed customers. Girish also reveals plans to launch a new vertical in 2025, further diversifying the company’s offerings and enhancing profitability.

As the affordable housing market gains momentum, fueled by government initiatives such as PMAY and the Interest Subsidy Scheme, Roshni is poised to play a pivotal role in achieving PNB Housing’s ambitious growth targets, contributing significantly to its overall retail portfolio.

What was the yield for Roshni in the first year, and how does it compare to the yield achieved in the second year?

In the first year of Roshni, the focus was on a safe and secure portfolio by targeting the low-risk segment, resulting in a yield of 11.5%. In the second year, the strategy expanded to include medium-risk segments, increasing the yield to 12.3%. By year-end, the yield is expected to reach 12.6%, and from next year, the yield is projected to exceed 13%.

How is PNB Housing’s strategy divided across different segments in the affordable housing market, and what is the targeted percentage of business from each segment?

PNB Housing focuses on the retail segment, with a faster growth rate for the affordable and emerging books compared to the prime book. Within affordable housing, the business is divided into high-risk, medium-risk, and low-risk segments, with the primary focus on the medium-risk segment, while maintaining limited exposure to high-risk and low-risk categories.

What is the potential of the affordable housing market in India, and how does government support like the PMAY scheme impact this sector?

Government schemes, including PMAY and the new ISS subsidy scheme, have significantly boosted the affordable housing market. The ISS scheme aims to benefit 1 crore customers over five years, with subsidies of up to ₹1.8 lakh per customer. This translates to 20 lakh customers annually, benefiting end-users and housing finance companies alike. The government’s focus on the EWS, LIG, and MIG segments aligns with PNB Housing’s strategy in affordable and emerging markets.

What is the planned growth for Roshni in terms of branch expansion, and what is the target for the retail book size by FY27?

The current retail book stands at ₹68,000 crore, with a target to grow it to ₹1 lakh crore by FY27. In the affordable segment, there are currently 160 branches, which are expected to increase to 200 by the end of this year and further expand to 300 branches by FY27. The total branch network will grow to 500, with the remaining branches focused on the emerging segment rather than the prime segment. Branch expansion efforts will primarily target Roshni and the emerging business.

How has 2024 been for the industry and the Indian economy as a whole?
The Indian economy performed well in 2024, with rural areas showing signs of recovery. While some segments, such as Microfinance Institutions (MFIs) and small-ticket personal loans, faced challenges, the mortgage industry maintained a growth rate of 13–14%. Secured products like mortgages and vehicle loans outperformed, though unsecured lending is expected to recover more slowly.

How has the BFSI sector performed in 2024, particularly for PNB Housing?
Within BFSI, the mortgage sector performed strongly. PNB Housing experienced no significant slowdown despite external factors like elections and heatwaves, achieving robust growth in retail and corporate segments.

How did PNB perform during 2024? What were the key developments and achievements of PNB during the year?

In 2024, PNB achieved significant milestones. The company successfully addressed four major challenges, including raising capital last year, which laid the foundation for improved performance. Growth in the retail segment saw considerable improvement, and the corporate lending segment was restarted. PNB also received a rating upgrade and managed to double its profitability over the last two years. This year, the company is poised to achieve over 17% growth with healthy margins, reflecting its strong performance and positive trajectory.

What are PNB Housing’s plans for 2025?
The company plans to launch a  LAP vertical in 2025, marking the beginning of new initiatives aimed at innovation and strategic growth.