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Kotak Bank to grow affordable housing potfolio

May 22, 2023

Kotak Bank to grow affordable housing potfolio
Kotak Mahindra Bank is focusing on increasing its affordable housing portfolio, Ambuj Chandna, president – consumer assets, said.

“We believe affordable housing represents a segment of homebuyers that are under-served by the banking ecosystem. We would like to develop capabilities to lend in that segment,” he said. “We started that business a couple of years of back and we are making good progress. We believe we will continue to grow largely because of the fact that historically we have not been tapping it too well.”
 
As borrowers in the affordable housing segment differ from large-ticket housing, Chandna feels it is necessary for banks to develop the capability to underwrite for this set of customers. Since ticket-sizes in the affordable housing segment are smaller, banks must also be more tech-oriented to keep costs more efficient. “Broadly, the speed of growth in home sales has slowed down a bit. As a derived product, the kind of jump in growth rate that we saw during COVID when interest rates were low will now stabilise.”
 
The bank is also focusing on growing its unsecured loan mix in a risk-calibrated manner. Here, the bank’s aim is to address customer demand and not necessarily to increase yields. “In unsecured, it is ultimately your ability to underwrite good quality of customers. Even today, a significant portion of the business that we do comes from our own customers,” Chandna said, emphasising that the bank has heavily invested in risk-analytics and data-based underwriting over the years.
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