HDFC Bank Director Keki Mistry on Wednesday asserted that the demand for housing will continue in India and it has the power to unlock the potential of the economy.

Speaking at the foundation day celebration of Bandhan Bank, Mistry said the housing sector also generates huge employment and has a better credit risk profile than other segments.

“Housing holds the key to unlock the potential of the economy. I am optimistic about the demand for housing in India. It also generates huge employment,” Mistry, vice-chairman and CEO of erstwhile HDFC said.

Mortgage lender HDFC has now been merged with HDFC Bank.

Mistry said the penetration level of mortgage lending is very low in the country as compared to the US or China.

“Mortgage to GDP ratio is very low in India,” he said.

“The structural demand for housing in the country will always be strong,” Mistry said, adding that “housing loans are safe and have better credit risk profile”.

Regarding corporate governance (CG), Mistry said the role of Independent Directors needs to be strengthened.

“CG is the measure of how companies are run. Sound CG principles are necessary for long-term sustenance. This is why the role of independent directors needs to be strengthened,” he said.

“Good CG has a distinct advantage as investors are ready to pay a premium. More importantly, the role of independent directors is crucial as the business environment has become far more complex,” Mistry said.

The independent directors serve as a conduit between various stakeholders and the management, he said.

Besides CG, environment, social and governance (ESG) is also becoming important and boards of companies have recognised this.

Talking about the economy, he said India has now been in the spotlight as one of the fastest-growing economies in the world.

“In recent years, India’s growth surpassed expectations. Foreign investors are now acknowledging the country’s growth prospects. It is poised to become the third largest consumer market in the world after the US and China,” he added.

The Indian banking sector has become more resilient with lower NPA levels, he said.

However, the economy is very much dependent on oil prices as India imports 85 per cent of its requirements, Mistry added.

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