Affordable housing finance: Affordable Housing Finance Companies (AHFCs) are witnessing a notable transformation in their loan portfolio composition. While housing loans remain dominant, constituting 74 per cent of the total loan book as of March 31, 2023, AHFCs are diversifying into the non-housing segment, particularly through 'loan against property' (LAP). 

This shift is driven by increased competition and the need to alleviate margin pressures. Non-housing portfolio, primarily LAP, provides funding for micro, small, and medium enterprises (MSMEs) and small businesses, utilizing property as collateral. 

The share of housing loans has decreased from 79 per cent (March 31, 2019) to 74 per cent (March 31, 2023), aligning with regulatory guidelines. 

As per RBI norms, HFCs must maintain a 60 per cent housing finance portfolio by March 31, 2024. CareEdge Ratings anticipates the non-housing share to further rise to 27 per cent in FY24 and FY25, as AHFCs seek to sustain margins. 

Some AHFCs near the regulatory threshold may face growth constraints due to these regulations.