Affordable Housing as a Growth Catalyst: SMFG Grihashakti’s Unique Approach to Serving Semi-Urban India

In an insightful Q&A interview, Mr. Deepak Patkar, MD & CEO, SMFG Grihashakti shed light on how the company’s growth strategy is anchored in affordable housing, particularly in semi-urban India, where increased infrastructure development has fueled the demand for homeownership. Secondly, how SMFG Grihashakti continues to expand its reach with a focus on empowering low and middle-income families and thus supporting financial inclusion in underpenetrated and underserved regions of the country.

Q1. How has your company’s focus on affordable housing, particularly in rural India, shaped your growth strategy? What makes your approach unique in this sector?

Our focus on affordable housing, especially in semi-urban India, has significantly shaped our growth strategy. We recognize that improved infrastructure, like roads, electricity, and industrialization in Tier 2 and Tier 3 cities have increased the demand for affordable homes.

What sets us apart is our tailored approach towards our customers by offering customized loan solutions for low and middle-income groups. Our on-ground underwriting team personally visits the customer and evaluates income sources like payment receipts, tax returns, cash income in family, and shop inventory statements. This ensures optimum loan amounts thereby making homeownership more accessible to a wider range of customers. Additionally, we have significantly enhanced our direct distribution capabilities, with our direct to customer vertical contributing to approximately 60% of fresh sourcing. This combination of tailored solutions and strong distribution helps us meet the growing demand for affordable homes in rural and semi-urban areas

Q2. How do you see the housing finance industry evolving in India over the next five years, especially with the increasing emphasis on affordable housing?

The housing finance industry in India is poised for significant growth in the next five years, especially with the government's focus on affordable housing through initiatives like the expanded Pradhan Mantri Awas Yojana (PMAY). Technological advancements such as digitized land records and improved infrastructure will further ease access to credit in rural and semi-urban areas. We expect a shift towards sustainable urbanization, where green housing solutions like solar panels and rainwater harvesting become more prominent. Overall, the sector will see deeper financial inclusion as credit providers like us bridge the gap for aspiring homeowners in underserved areas.

Q3. What impact do you believe recent trends and increasing governmental focus have had on the housing finance sector, and how is SMFG Grihashakti adapting to these changes?

The FY25 Union Budget’s expansion of PMAY to include 3 crore additional houses and the proposed interest subsidy scheme for urban housing will boost access to home loans. As a company, we are adapting to these trends by expanding our presence in Tier 2, Tier 3 cities, and rural areas, where demand for affordable housing is rising. Secondly, we also fund mid to small size real-estate projects who specialise in developing residential projects thus supporting builders in creating affordable housing projects. Additionally, we actively extend finance to credit-deprived communities by providing easier access to formal loans. This enables us to reach underserved regions and bring financial inclusion to a broader customer base. With over 170 branches across India, we are growing our distribution networks and hiring local talent to better serve these regions.

Q4. What are the key opportunities and challenges you foresee for the housing finance industry in both rural and urban markets in the coming years, and what strategies do you intend to implement to address them?

Opportunities in the housing finance sector lie in the growing demand for affordable housing in both rural and urban markets, especially with the push for green housing solutions. However, we also face challenges. In urban areas, higher land costs and rising material prices make the affordable housing segment less attractive to developers, creating a supply-side issue.. We are focusing on expanding our presence in underserved areas and providing products that align with our customers' specific needs, including flexible repayment plans. These strategies will help us navigate the challenges while tapping into emerging opportunities.

Q5. With the rapid advancement of technology in financial services, how is SMFG Grihashakti leveraging digital tools to improve customer experience and operational efficiency?

SMFG Grihashakti is embracing cutting-edge technology to enhance customer experience and operational efficiency. Our Loan Origination System (LOS) revamp, set to launch in the coming months, aims to provide a seamless and user-friendly experience, reducing onboarding time and improving loan disbursement turnaround. On the collections front too, we are implementing digitalization of processes along with various online payment options to customers. We have also subscribed to the Account Aggregator network to access bank statements of prospective customers digitally. In terms of risk management, we have deployed systems for fraud checks and have developed an Early Warning Systems (EWS) framework to ensure robust risk mitigating tools.

Through targeted initiatives, SMFG Grihashakti is committed to bridging gaps in housing finance across rural and semi-urban India, with a customer-centric approach that drives both growth and financial inclusion. As the industry embraces technological advancements, SMFG Grihashakti remains committed to delivering innovative solutions that make homeownership more accessible and affordable for all.