Dewan Housing Finance (DHFL), the second largest housing finance company after HDFC, plans to increase its total disbursement to Rs 25,000 crore over the next three years, Kapil Wadhawan, chairman and managing director, DHFL, told Abhishek Anand in an exclusive interview. Excerpts:

With inflation now at close to 5 per cent, what was the rationale behind reducing home loan rates at this juncture?

Commodity prices, as well as the food prices, have hardened in the past few months. Once inflation breaches the 6 per cent mark, the Reserve Bank of India may start to tighten the belt. But, before we decided to lower the interest rate to 8 per cent, for loans up to Rs 5 lakh, and to 8.25 per cent (for the first two years), for loans between Rs 5 lakh and Rs 20 lakh, a few days ago, we took into account several factors and one of them was possible monetary tightening. Basically, due to growth projections, we have enough capital to take care of any hardening of interest rates.

Will the lowering of rates have any impact on your net interest margin?

The lowering of rates would have no bearing on our net interest margin. It would continue to be around 3 per cent.

Do you plan to increase your presence in high-income group as well?

Loan seekers from high-income group would be the biggest beneficiaries from our decision to increase the maximum repayment tenure to 25 years from 20 years. But, at the same time, it is true that we have mainly catered to the needs of mid and low-income groups. Our average ticket size of loans stands around Rs 5 lakh. We see a huge potential in this group (middle and low income) and would continue to focus on this segment.

What kind of growth are you expecting?

In past three years, our compounded annual rate of growth has been around 30 per cent. This year (2009-10) has turned out to be even better with growth rate closer to 50 per cent. At the end of the present financial year, our outstanding home loan portfolio would stand at Rs 9,000 crore and at the end of 2013, we expect a total home loan portfolio of close to Rs 25,000 crore.

What are your expansion plans?

At present, we have close to 76 branches and more than 80 service centres. Initially, we planned to open 14 more branches in the present financial year and so far, we have opened five branches.

abhishekanand@mydigitalfc.com