Motilal Oswal Home Finance Limited Unlisted Shares

(i) Motilal Oswal Home Finance ( previously Aspire Home Finance Corporation Limited ) is a professionally managed housing finance company incorporated on 01.10.2013, with a unique combination of financially sound and technically experienced promoters who are well known in their domain for professional ethics and strong execution capabilities.

(ii) Motilal Oswal Home Finance works on the business philosophy of financial inclusion of Lower and Middle Income (LMI) Indian families by providing them access to long term housing finance. Motilal Oswal Home Finance is a subsidiary of Motilal Oswal Financial Services Limited (MOFSL). MOFSL is a well-diversified, financial services company focused on wealth creation for all its customers, such as institutional, corporate, HNI, and retail.

To whom Motilal Oswal Home Finance Ltd. (MOHFL) lends?

a) It provided home loans to individuals and families for purchase, construction, and extension of the house.

b) It provides loans for repair and renovation of houses and home loans to families in the new to credit, self-employed, cash salaried category where formal income proofs, Credit Bureaus reports are not easily available, and the repayment capacity of such families are appraised based on their cash flows and Internal Score Cards.

Presence as on 31.03.2020:

MOHFL is operating in nine states – Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Rajasthan, Chhattisgarh, Tamil Nadu, Telangana, and Andhra Pradesh. MOHFL now has 110 Branches across these nine states.

Loan book size as on 31.03.2020

MOHFL’s total outstanding loans in FY20 stood at R 3,667 crores. Loan book has reduced as compared to last year on account of sale of NPA book to ARC during the year. NPA and write off a pool of Rs 595 crores for consideration of Rs 293 crores at 50% haircut which has also resulted in lower NPAs as well as a reduction in the loan book.

Underwriting:

In the business of lending, underwriting is the single most parameter which one should look in order to make an investment in the company. Underwriting is a process of distribution of loans. If the company has a robust process for underwriting, then chances of NPAs get reduced considerably. Now, let us see how MOHF does underwriting?

a) The loan approval process at MOHFL is in 4 layers of an approval process based on the ticket size of the loan.

b) Approvals of lending proposals are carried out by various authorities from Cluster Credit Head to National Credit Head.  Approvals beyond certain limits are referred to as the Chief Operation Officer. An additional layer of in house legal
and technical makes the underwriting process more robust.

c) There is a Dedicated Risk Containment Unit (RCU) in the Company to minimize fraud related to income documents, profiles, and collateral.

Borrowing:

Lending is a business where we need money to give money.  MOHF first arranges money and then distributes it to the people in the economy to buy a new house or reconstruct. Now, how MOHF arranges fund?

a)  From banks by a way of term loan.
b) NCD by issuing commercial paper.

MOHFL total borrowings as of March 31, 2020, of Rs 2,954 crores. And, the cost of borrowing in FY20 at 10.16%.

A journey of Motilal Oswal Home Finance

2014:
(i) Commencement of Business Operation on 22.05.2014.
(ii) The first disbursement booked in Akola Branch in June 2014.
(iii) The loan book crossed 50 Cr.

2015:
(i) Presence across 14 locations.
(ii) Total staff: 160 employees.
(iii) Loan book at 357 Cr with 3565 live accounts.
(iv) Year-end PAT at 18 Cr CRISIL upgrades rating for long term borrowings from “A/Stable” to “A+/Stable“ Loan book crosses 550 Cr with 5,500 Cr live loan accounts Present at 23 locations.

2016:
(i) Present in 51 Locations with employees count of 500.
(ii) PAT for the years at 40 Cr.
(iii) Received the first 50 Brand 2016 award by WCRC.
(iv) Presence extended to 62 locations.

2017:
(i) Awarded second prize for best performing Primary Lending Institution under CLSS for EWS/LIG by the Ministry of Housing and Urban Poverty Alleviation.
(ii) Expanded to 6 new states with a presence in 121 locations with a staff count of 1049.
(iii) loan Book of 4165 Cr with 46,142 live accounts.

2018:
(i) 4682 Cr of the loan book.
(ii) Capital Infusion by MOSFL of Rs. 150 Cr.
(iii) Strengthening of a core team.
(iv) Strengthening Credit & Risk