The Rs 4.8 lakh crore home loan market of India is likely to experience more competition in the upcoming months. The competition would rise owing to the constant pressure building up from the part of non banking finance companies (NBFCs). These companies are seeing a compounded annual growth rate (CAGR) of 15% since the last five years.

Laxmi Vilas Bank has come up with its housing finance wing. Others in the race are Shriram City Union Finance and financial services intermediary Edelweiss.

"There is enormous room not just for commercial banks but also for housing finance companies (HFCs). Our strategy to enter this sector is to focus on the retail side of business. We have already a asset management company and would be entering into life insurance," says Mr Rujan Panjwani, president, Edelweiss Capital.

"We have been offering gold loans and now our customers can also avail home loans from us. The housing finance foray will begin shortly through a subsidiary with an initial capital of Rs 100 crore," says Mr R Kannan, MD of Shriram City Union Finance (SCUF).

Mr Kapil Wadhawan, CMD of DHFL, says, "Housing finance being a secured lending with lesser delinquencies is much safer. The consistent growth in the books of HFCs is also acting as an incentive for new entrants."

"Lending is part of their business proposition and it may become difficult for them to focus on lending quality," he warns.