MphasiS founder plans to set up housing firm

Jaitirth Rao, founder of technology firm MphasiS, is looking to set up a housing finance corporation to give loans to low income home buyers. He is targeting buyers whose apartments cost about Rs10-lakh each.

“We have submitted a request to the National Housing Bank and are awaiting regulatory approval,” said PS Jayakumar, Co-founder and MD at Value and Budget Housing Corporation. VBHC is jointly promoted by Rao and Jayakumar, and is looking to build homes for the poor.

A home loan company that arranges finance for the buyers is expected to fit in with VBHC’s business plans. Mr Rao declined to comment on the issue. The proposed financial institution will have independent investors and management.

The Indian home loan market has become extremely competitive after the entry of PSU banks about four years ago. The opportunity is there for a new firm such as the one Mr Rao is looking to promote with growth rates of over 30 per cent, but there are lots of hurdles as well.

The teaser rate was also a product of the economic slowdown as banks felt the need to revive economic activity through cheap lending. This phenomenon should come to a close once the base rate concept kicks in from July this year. To be competitive, Rao’s firm needs to ensure access to cheap funds even as it competes with the likes of SBI and HDFC and private players like DHFL.