Ahmedabad: PNB Housing Finance today said its Gujarat portfolio has lower-than-average Non-Performing Asset (NPA) levels. This positive trend in Gujarat serves as both a confidence booster and a strategic driver for the company’s future growth plans. PNB Housing Finance is currently the third largest asset finance company in India.

According to Jatul Anand, Executive Director of PNB Housing Finance, the national average NPA for PNB Housing Finance stands at 1.05%. However, the Gujarat portfolio has demonstrated even stronger fundamentals, with NPAs reported to be “a little lower than the national average” at 0.6%.

Gujarat contributes approximately ₹5,000 crore in loans and serving around 30,000 customers, operating out of 26 branches. PNB Housing Finance reports that over 80% of its customer base nationwide boasts a CIBIL score of 700 or above, indicating a borrower pool with strong creditworthiness.

The company has strategically targeted mid-ticket size loans—up to ₹1 crore—as a segment that balances risk control with growth potential. Key markets include Ahmedabad and Surat, with expansion into other towns where growth potential is strong, particularly in affordable housing and among mid-side self-employed customers.

The company anticipates a “decent growth” of 10% to 15% annually in Gujarat region. By March 2027 (FY27), the company aims to nearly double its Gujarat portfolio size, targeting close to ₹10,000 crore in loans.The PMAY portion in Gujarat alone is expected to exceed ₹500 crore. This projected growth in Gujarat will play a crucial role in helping PNB Housing Finance achieve its overarching goal of scaling its total loan book to ₹1 lakh crore by FY27.

Jatul Anand said PNB Housing Finance is undergoing a strategic transformation, pivoting its focus from traditional metropolitan markets and luxury housing toward the emerging opportunities presented by Tier 2 and Tier 3 cities and the affordable housing segment. Historically, housing finance companies and banks predominantly focused on funding in metros, aiming to grow their loan book in the top six or seven cities of India (the “Prime segment,” characterized by higher ticket sizes and luxury housing).However, the market has evolved significantly in the last four to five years, with Tier 2 and Tier 3 cities emerging as a “very predominant and very substantial market space” for growth.PNB Housing Finance has adapted by transforming its focus from the Prime segment to the Emerging Segments (Tier 2) and the Affordable Housing segment (Tier 3).This transition allows the company to cater to a new set of customers, primarily first-time borrowers.

“It is not that the customers are not credit worthy. They are credit worthy customers in each of the towns, districts, but they are not credit tested,” explained Anand. This lack of a formal credit history (bureau score) is due to various factors: they might not have needed a loan, they may be hesitant to approach banks, or they avoid the lengthy, time-consuming, and technical loan documentation proces. To bridge this gap, PNB Housing Finance has provided doorstep services, reached out to these customers through awareness programs, and heavily expanded its branch network in Tier 2 and Tier 3 cities over the last two years.The focus is specifically on catering to mid-ticket size and smaller ticket size loans.

To formalize this focus, the company launched its Affordable Housing business in 2023.This vertical is named “Roshni”.The Roshni loan book has already surpassed ₹6,500 crore.To appraise these new customers quickly, the company has skilled its underwriting models using Artificial Intelligence (AI) and Machine Learning (ML) to analyze bank statements fast.Technological interventions are specifically used to analyze bank statements, GST returns, and facilitate online ITR verifications quickly for self-employed customers, often allowing sanctions within four to five days.

The Affordable Housing segment is strongly supported by the revitalized government scheme, Pradhan Mantri Awas Yojana Urban (PMAY-U) 2.0, which provides a subsidy for housing for all for five years.This scheme, which replaces the earlier CLSS (Credit Linked Subsidy Scheme) that closed, covers a larger population. The scheme provides subsidy benefits on loans up to ₹25 lakh for properties valued up to ₹35 lakh. It covers Economically Weaker Section (EWS), Low Income Group (LIG), and Middle Income Group (MIG) categories, with household income levels up to ₹3 lakh, ₹6 lakh, and ₹9 lakh respectively.The subsidy amount ranges from ₹180,000 to ₹363,000 and is provided in five tranches.

PNB Housing Finance ensures its customers receive the benefits of the subsidy, having booked over ₹200 crore in loans where customers are benefiting.The process utilizes technology, including proper geo-tagging of the homes, to ensure the subsidy reaches the correct recipient.An additional advantage of the new PMAY-U 2.0 scheme is that the customer who avails the loan and subsidy cannot sell the property or transfer the loan for 10 years, providing financial institutions with a captive customer base for an extended period.

Anand observed several positive macroeconomic trends. While direct changes in tax slab benefits had a limited impact, the GST cut created a positive sentiment in the market, particularly among the trader profile and the self-employed segment, leading to a rise in consumer uptake.The self-employed customer base has grown from approximately 30% to 40% of the overall portfolio (compared to 60% salaried). The average self-employed loan ticket size has also increased from around ₹30-32 lakh to ₹36-37 lakh, driven by increased property prices and improved consumer affordability.

There is a clear trend of individuals moving from rented accommodation to owned accommodation, preferring to pay an EMI over rent because “you end up building an asset for yourself”. Furthermore, lifestyle changes are driving up demand, with many customers in Tier 1 and Tier 2 cities upgrading from two-bedroom to three-bedroom homes, increasing the average ticket size. The company is seeing significant uptake in purchase loans and self-construction loans. Self-construction loans are considered “very safe” because the customer already owns the land and only requires funds to build.

Based on the details provided by Jatul Anand, the new Pradhan Mantri Awas Yojana Urban (PMAY-U) scheme, referred to as PMAY-U 2.0, has been revamped and reintroduced to cover a larger population and provide specific benefits for affordable housing.

The features of the new PMAY scheme are:

• The scheme is referred to as Pradhan Mantri Awas Yojana Urban (PMAY-U) 2.0. It is a revitalized version of the subsidy scheme, replacing the earlier Credit Linked Subsidy Scheme (CLSS) which had closed. It is considered a new iteration in a new avatar.
• The scheme provides a subsidy for housing for all for five years. The official confirmed the subsidy would be available for the next five years, starting September 1, 2024.
• The subsidy amount provided ranges from ₹180,000 to ₹363,000.
• The subsidy is provided in five tranches (or payments).
•  The scheme provides subsidy benefits on loans up to ₹25 lakh. The property value should be up to ₹35 lakh.

The PMAY-U 2.0 covers a larger population than its predecessor. It is divided into three categories based on household income:

Category	Annual Household Income
EWS (Economically Weaker Section)	Up to ₹3 lakh
LIG (Low Income Group)	Up to ₹6 lakh
MIG (Middle Income Group)	Up to ₹9 lakh

The scheme aims to cover the portion of the loan segment up to ₹25 lakh for properties up to ₹35 lakh within these three income levels.

• Geo-Tagging: The process involves proper geo-tagging of the home.
• Purpose: This technological intervention is used to ensure the subsidy goes “into the right hand”.
• Lock-in Period: A customer who avails a loan and the accompanying subsidy under PMAY-U 2.0 cannot sell the property or transfer the loan for a period of 10 years.
• Benefit: This provides the financial institution with a stable, captive customer base, whereas in current general financing, customers frequently transfer loans to other institutions for rate benefits or service.
• The applicant must be a resident (or “epicenter” in the source).
• The applicant must not own a pakka (permanent) house already.