LIC Housing Finance CEO Tribhuwan Adhikari has called for interest rate caps on affordable housing loans, citing that current 15-16% rates are unsustainable. The company aims to grow its loan book to ₹3.5 lakh crore by FY27 after a strong 14% growth in Q1.
Tribhuwan Adhikari, the Managing Director and CEO of LIC Housing Finance, has raised concerns regarding the high interest rates currently prevalent in the affordable housing sector. In recent comments, he highlighted that interest rates reaching as high as 15% to 16% make home ownership difficult for the target segment. To address this, he suggested that regulators such as the Reserve Bank of India or the National Housing Bank should consider putting a limit on the lending spreads that lenders can charge over their cost of funding.
The debate over lending rates is particularly significant for Housing Finance Companies, or HFCs, which operate differently from commercial banks. While commercial banks are required to link many of their retail loans to external benchmarks like the repo rate, HFCs have more flexibility in their pricing models. Adhikari noted that HFCs often rely on banks for a large portion of their funding. He cautioned that if HFCs are forced to adopt strict external benchmarks without having access to low-cost deposits—which banks enjoy—it could create a structural disadvantage for the housing finance sector.
Growth Targets and Strategic Shift
Despite the challenges in the affordable housing segment, LIC Housing Finance is pursuing an aggressive expansion strategy. The company has introduced a product based on bank statements and GST filings to assess borrowers who may not have traditional salary slips or income tax records. This approach is intended to widen the company's customer base while managing credit risk.
The company’s recent financial results reflect this focus on growth. In the first quarter of fiscal year 2027, LIC Housing Finance reported a net profit of ₹1,499 crore, marking a 10% increase. The company also saw its loan growth accelerate to 14%, which management identified as the strongest growth rate in several years. Looking toward the future, the company has set a target to grow its total loan book to ₹3.5 lakh crore by the end of fiscal year 2027.
Risks and Monitorables
For investors, the key area to monitor will be how the company balances this accelerated growth with its credit quality. Historically, the company has faced periods where loan book growth was lower than some industry peers, largely due to high levels of customer repayments. While the current 14% growth indicates a successful push to reverse this trend, the sustainability of this momentum will depend on demand in the affordable housing market and the company’s ability to manage margins if competitive pressure on lending rates intensifies. Investors may also track future regulatory updates from the Reserve Bank of India or the National Housing Bank regarding lending spreads, as any shift in policy could impact the profitability of the affordable housing portfolio.