Dear Stakeholders,

I hope this letter finds you safe and well. Lives, livelihoods and businesses were severely impacted by multiple waves of the Covid-19 pandemic. I would like to extend my heartfelt gratitude to everyone, especially our frontline personnel, who have diligently fought to protect the safety of our people and communities.

After an exceptionally challenging macro-economic scenario and multiple waves of the Covid-19 pandemic, this year proved to be a good one, bringing out relatively the best as the economy progressed steadily. Despite a highly volatile previous year, 2021-22 brought in great opportunities, with the economy expanding by 8.7%. This expansion was driven by reducing infection rate from Covid-19, widespread inoculation, revival across business activities and an overall boost to public morale with the ease of restrictions and life resuming normalcy to an extent. The economy was further bolstered by the Government’s liquidity and stimulus measures along with RBI’s loan moratorium and reduced interest rate defences

The year also witnessed India experiencing new shoots of growth. There was a considerable uptick in the core sectors as the demand and consumption restored to their pre-pandemic levels as the year progressed. Increased levels of Government and private consumption further boosted our reviving economy.

Moving ahead, the next phase of India’s development will be significantly determined by how promptly the country extends its physical and digital infrastructure. And, housing, in this respect, plays the part of a crucial component. The year 2022 is witnessing robust growth in housing demand in India. And this demand is likely to intersperse right throughout the year. The housing finance industry in India is expected to grow by 11% in next 3 to 4 years

The Government continues to prioritize affordable housing while also looking for methods to improve existing financing processes – offering liquidity to stalled real estate projects. Indian housing finance industry has seen exceptional growth, with its loan book more than doubling in the last five years, reaching ₹ 22 trillion in 2020-21. HFC’s with a 33% share in the overall housing space, is estimated to see growth in their loan book owing to increased residential demand, co lending arrangement and HFC’s extensive reach and customer servicing capabilities. Government’s vision of ‘Housing For All’ is another initiative for the continuous efforts facilitating financial inclusion of the undeserved and informal segments. Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana Urban is a government initiative that supports the economically weaker sections of society taking them a step closer to owning the home they live in. IIFL Home Finance in line with government’s vision, successfully disbursed CLSS subsidy to over 55,700 beneficiaries amounting to more than ₹ 1,300 Crore since the inception of the scheme.

There has been a consolidation in the housing finance industry, which has opened up opportunities for IIFL Home Finance to scale up and cater to the rising demand. This was made possible as we leveraged our strong foundation, advanced digital infrastructure, prudent underwriting capabilities, experienced management and governance oversight, as well as sustainability in our core values. As a part of our broader philosophy, we emphasized supporting first time home buyers, women buyers/ co-borrowers – the marginalized sections of the society. We provided loans to over 151,000 first-time home buyers and assisted over 97,700 women borrowers/co borrowers in acquiring their own homes. During the year, we achieved our highest ever monthly and quarterly disbursals along with the highest-ever customer onboarding by expanding our reach to Tier-I, II and III cities. With the expansion in our network, we have also expanded our workforce during 2021-22.

We are a digitally native organization. Technology runs in our DNA and everything we do at IIFL Home Finance. During the year, we achieved the milestone of 99% digital client onboarding. We also launched our Jhatpat App on Google Play Store, making it more accessible to our customers. During the year, backed by our digital infrastructure, we achieved home loan approval time of 25 minutes with loan being disbursed within 24 hours, whereas we have brought down the turnaround time to just 3 days for non Home Loan Applications. We are integrating digital capabilities across verticals to make our digital infrastructure robust and accurate, thereby providing an agile and seamless customer experience. To further improve our accessibility, deepen our reach into the country’s corners and provide a seamless experience to our customers, we re-engineered and expanded our digital infrastructure. With advanced analytical tools and automation, our credit underwriting, appraisal and collection process is faster than ever. Our tie-ups with fintech companies for instant KYC validation, E-signing and easy loan onboarding have enhanced our productivity, helped in cost-optimization and provided a superior customer experience. IIFL Home Finance provides hassle-free, seamless, online loan processing without requiring physical documentation. Furthermore, our customers can now check loan status and resolve queries online.

As part of our broader corporate philosophy, at IIFL Home Finance, sustainability is embedded in our core values. We focus on investing in Green Certified projects under our Project Loan vertical to ensure the advancement of sustainable and socially conscious development in India. Also, we make sure that while the housing is made sustainable there is a sense of honour, security and ownership that the home owners associate themselves with. During the year, IIFL Home Finance Ltd. collaborated with Asian Development Bank (ADB) through a Technical Assistance (TA) program of USD 1 million and loan of USD 10 million to support the green building ecosystem in the affordable housing sector in India and a loan of USD 58 million to enable lower-income groups, especially women, in the country to get access to affordable and green buildings. The funding is first of its kind in India, shall be utilised to organise knowledge events and increase awareness among various stakeholders regarding the green certified housing standards in the affordable housing segment This validates our credibility and our intent to make a difference in people’s lives.

In terms of our performance, we were able expand our AUM during 2021- 22 to ₹ 236,174 million. Moreover, we also supported developers for sustainable and affordable housing development through our Project Loans vertical. We extended credit to SMEs and aided them through our Secure Business Loans. Our PAT during the 2021-22 stood at ₹ 5,780 million, achieving our highest ever profitability, demonstrating a growth of 44% over 2020-21. As a result, we clocked healthy return ratios, with Return on Assets expanding by ~80 bps, reaching 3.5%, while Return on Equity reached 24.3%, growing by ~400 bps over the previous financial year. Furthermore, with a capital adequacy of 30.5%, we are well leveraged to grab the opportunities in the housing finance space going ahead.

During the year, our loan book grew by 5%, reaching ₹ 156,688 million, underpinned by our proficient customer servicing capabilities, digital intervention and stable liquidity position. While growing in size, we also focused on improving our asset quality. Our GNPA on AUM, during 2021-22, stood at 2.6%, considering RBI notification dated November 12, 2021. Excluding the impact of RBI notification, the GNPA on AUM for 2021-22 stood at 1.8%. The overall provision coverage ratio stood at 120% of the AUM, highlighting strong cover against any adverse risks.

Under Asset-Liability Management policy, our Company has been able to maintain adequate liquidity. We also raised funds by issuing non convertible debentures (NCDs) in two i.e. Unsecured NCDs in July 2021 and Secured NCDs in December 2021. The NCDs were rated AA/Stable by CRISIL and by AA+/Negative by BRICKWORKS. We have been able to reap strong belief from retail subscribers with over 22,300+ participants, Furthermore, with the updated co-lending set up between banks and HFCs, we expanded our loan book with a low risk profile and asset-light balance sheet. During the year, under the co-lending agreement, we tied up with several banks to extend loans to our customers. We co-lent over ₹ 17 billion with multiple banks while only having exposure of 20% on our balance sheet.

We undertook the necessary steps to ensure our people’s health, safety and well-being. We continue following all Covid-19 precautions and guidelines to keep our workplace safe. During the year, we continuously engaged with our people to keep the team motivated while nurturing them. Our Management interacted with the employees regularly to understand and resolve their issues. We also organized digital and physical training sessions. Our people are our driving force, and we take an extra step to ensure an equitable and unbiased work environment that fosters overall development, diversity, and employee retention.

We are an agile organization, ready to take all the uncertainties posed by the pandemic and the geopolitical scenario. Our extensive physical reach pan India, stronger-than-ever digital capabilities, comfortable liquidity position, co-lending arrangements and improved productivity are expected to majorly boost us during our growth cycle in the following years. At IIFL Home Finance, our core values will continue to guide our way forward with a customer-centric approach and an aim to make affordable housing a reality in India. At IIFL Home Finance our sustainable strategy is governed by the idea of ‘Complete Profitability – An ESG Initiative’. It is the DNA and the reflection of the impact made through inititaives which we drive towards four pillars of our success: Employees, Organization, Society and Environment. With our prior experience, we have stood our ground and taken challenges head-on. Going ahead, we would be investing in expanding our branches, digital capabilities and talent pool to explore the vast opportunities in the Indian housing industry while being socially and environmentally responsible.

I take this opportunity to thank our stakeholders, my colleagues on the Board, our customers, and our regulators for their continued trust and support. Your faith in us has helped us develop a powerful organization, and we promise to always place your best interests above everything. We are determined to work our way through the current scenario, and our future is bright and promising.

With regards,

Monu Ratra

Chief Executive Officer (CEO)