A talk on 'Demand & Funding of Mortgages and the latest trends in consumer finance' by Mr.Sujan Sinha (Sr VP and Head of retail assets, Axis Bank)

Mr. Sujan Sinha, Senior Vice President and Head of retail assets at Axis Bank, delivered a guest lecture at IIM lucknow on ‘Latest trends in consumer finance and mechanics of demand and funding in mortgages’. Sharing his assessment of the current crisis in India, he opined that the current crisis is not a home grown crisis and is difficult to project what problems are still to come in the American economy. But, showing the faith in Indian consumer, he felt that this crisis will first see the revival of consumer spending and then the revival of corporate India. He believed it was fortunate that the policy norms kept the exposure of Indian banks limited. Thus, the current crisis is more of a result of lack of faith in the financial system than any underlying losses.

Due to this crisis realty sector is badly hit. Due to crunch of liquidity, the small builders are forced to sell properties at a lower prices, this is pushing prices in the real estate market southwards. Now this unexpected drop in prices is influencing buyer to get into a wait and watch mode expecting a further price drop. Thus, the sales of real estate are dropping further trapping the industry into the vicious demand cycle. This is also affecting the supply side of real estate and builders are stuck with semi finished projects for which they are not able to arrange finances. But, the aggressive moves by RBI to help liquidity in the market would bring back the sanity in the market. Also cut in crucial rates by RBI will also ensure a correction in time deposits that are at an all time high to come down to single digit interest rates.

He concluded the discussion on a positive note praising past IIM Lucknow recruits for being aware of ground realities and long term thinking. The session was very well received by the students and was punctuated with regular questions.