It would be cliché to say her philosophy springs from the East, but Renu Sud Karnad does offer a piece of advice to those coping with the current American mortgage crisis: accept the chaos. It is, after all, what she's done from the start.
"When I joined [the Housing Development Finance Corp.], the company was at a nascent stage and the concept of retail housing finance in India was raw," she says. "There were challenges: We were operating in an environment where long-term resources were hard to come by, and we were in the business of mortgage lending but there were no foreclosure norms. We had to educate the borrower, but we had to first understand the system ourselves."
In the 30 years since, Karnad's been at the forefront as the New Delhi firm has grown into a $20 billion institution. Revenues three fiscal years ago stood at $1.06 billion with $389 million in profits before tax; now those figures are $2.2 billion and $609 million, respectively. And Karnad finds herself executive director in charge of HDFC's entire lending business, the first woman on the board of India's largest mortgage company and watching over nationwide operations from the Himalayas to the southern tip of the sub-continent.
As you might imagine, in India there is no one-size-fits-all. "Our housing markets across the country behave in such disparate ways-for instance, there is saturation with no fresh supply in say South Mumbai," she says. Satellite towns of New Delhi have just seen a correction after a sharp run-up in prices. Scattered small-tier markets are growing. "So much of my efforts are really spent in empowering my colleagues to be able to make their own prudent decisions-they are the ones dealing directly with customers and therefore understand the local nuances."
The Indian housing markets, disparate as they are, have been insulated from slumping; demand remains strong and there's an acute shortage of homes, so Karnad thinks chances of a price crash are remote. She says the greatest challenge is making homes more affordable to a young, rapidly urbanizing population. "It's an uncertain market, though. One has to be prudent."
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