Tribhuwan Adhikari, MD and CEO of LIC Housing Finance, has called for capping interest rates on loans in the affordable housing segment, according to reports from The Times of India. Speaking at the India Housing Week 2025, Adhikari stated that some housing finance companies are charging interest rates of 15-16% in the affordable housing segment, which he described as a 'misnomer' because borrowers cannot afford such high rates. He suggested that the Reserve Bank or National Housing Bank could consider capping lending spreads over funding costs to address this issue.
As reported by The Times of India, Adhikari noted that affordable housing finance is a misnomer because the borrower definitely cannot afford 16%-17% interest rates. He emphasized that the current pricing structure creates a significant affordability gap in the housing finance sector. The proposal comes as the affordable housing segment continues to face challenges in maintaining sustainable lending rates while ensuring borrower affordability.
According to the report, Adhikari highlighted that about half of the sector's borrowings come from banks, which creates challenges for rate benchmarking. He explained that unless housing finance companies received similar access to low-cost funding, linking HFC rates to external benchmarks would put them at a disadvantage. Currently, banks' floating rates are linked to the repo rate, but this structure doesn't apply to housing finance companies due to their different funding sources. Adhikari noted that in the case of banks, RBI links their floating rate to the repo rate, but he doesn't see a case for linking HFC rates to external benchmarks given their funding structure.
As reported by The Times of India, LIC Housing Finance is cautiously operating in the affordable housing segment through a 'banking surrogate' product that assesses borrowers using bank statements and GST filings instead of income tax returns or salary slips. This approach allows the company to maintain its presence in the affordable segment while addressing the affordability challenges faced by traditional lending methods. On the company's growth trajectory, Adhikari said LIC Housing Finance expects its loan book to stand at around ₹3.5 lakh crore by the end of FY27. The company's net profit in Q1FY27 rose 10% to ₹1,499 crore and loans grew 14% - the strongest growth in four to five years, with momentum expected to continue.
