How Aadhar Housing Finance Turned “No Payslip? No Problem” Into a ₹31,000 Crore Business

India’s mortgage market is much smaller than in most other countries. Home loans here make up less than 10% of GDP, while in the US it ’s about 60% and in the UK, 64%. Some of this is because India is less wealthy, but another reason is that many Indians who could repay a home loan don’t have a payslip, which most lenders require.

Aadhar Housing Finance has spent more than ten years focusing on this gap, and in doing so, has become India’s largest lender in this space.

TL;DR

No payslip. No problem. That simple idea has helped Aadhar Housing Finance build a ₹31,000+ crore home-loan book by lending to Indians that traditional banks often struggle to serve-small shopkeepers, tailors, vendors and other self-employed borrowers.

Its secret is a branch-heavy model that verifies income on the ground, rather than relying only on salary slips and documents. The result: 23%+ loan-book growth since FY19, strong profitability and low credit losses.

The catch? Big lenders are now chasing the same opportunity, putting Aadhar’s growth and margins to the test.

The Opportunity

Government researchers have estimated India’s housing shortage at nearly 100 million units, mostly affecting lower-income households. These are the people who have the hardest time getting formal loans because their income isn’t documented. Even when new homes are built, supply falls short: in the top eight cities, about 600,000 new homes are needed each year, but only around 200,000 are built. For the lowest-income groups, the gap is even wider, at about eight homes needed for every one supplied.

The market for home loans under ₹25 lakh, which is considered “affordable housing,” is worth about ₹10.9 lakh crore. However, it has grown by less than 6% a year since FY19, compared to about 13% annual growth in overall housing credit. This slow growth is mainly because public-sector banks, which dominate this segment, have been pulling back. In response, a few specialist lenders, including Aadhar, have stepped in and grown their loan books by over 23% a year – about four times faster than the market average. A government scheme relaunched in September 2024, PMAY-U 2.0, also helps by giving eligible low-income borrowers a subsidy of up to ₹1.8 lakh, paid over five years instead of all at once. This setup makes it less appealing for borrowers to pay off their loans early and switch to another lender, which benefits companies like Aadhar.

What Aadhar Does, and Why It’s Different

Aadhar is the largest specialist affordable-housing lender by loan book. More importantly, it is also one of the most willing to lend to people whose income cannot be documented. About 43% of its loans go to self-employed customers, such as tailors, small workshop owners, and vegetable-cart vendors who do not have salary slips. Lending to this group is much riskier than lending to people with regular paychecks, which is why most big banks and mainstream housing finance companies avoid them.

To make this approach work, Aadhaar uses two different loan approval processes. Salaried customers are processed quickly through centralised units. Self-employed and informal-income customers go through a slower, branch-led process where credit officers visit their homes and workplaces to check their real earnings. This method is costly and difficult to scale, unlike a typical bank’s loan desk. That challenge is what keeps bigger competitors away.

Aadhar supports this process with a network of 628 branches across 21 or 22 states, and no single state accounts for more than 15% of its loan book. This makes it the most geographically spread-out among its listed peers. About 12,600 local micro-agents, called “Aadhar Mitras,” help reach towns too small for a full branch. A technology platform built with TCS has lowered the cost of processing each loan and moved collections almost entirely online. Because Aadhar’s write-offs have stayed among the lowest in the industry, its credit rating has improved. CARE upgraded it to AA+ in mid-2025, which made borrowing cheaper. By mid-2026, its borrowing cost dropped to about 7.3%, the lowest in over two years, even as competitors tried harder to win market share.

How It’s Grown

Aadhar’s loan book has more than tripled since FY19, growing from about ₹10,000 crore to ₹31,364 crore by June 2026. It passed the ₹30,000 crore mark in FY26, a milestone that management had been aiming for and mentioned on its earnings call. Even more impressive is the consistency: return on assets (RoA) has stayed at or above 4% for 12 straight quarters through mid-2026, which is rare for any lender, especially one serving borrowers without formal income proof. Profit for FY26 was over ₹1,100 crore, up about 21% from the previous year. The branch network has also expanded from 270 ten years ago to 628 now, with a goal of more than 750 by FY28.

What Makes This Business Interesting

Two things about Aadhar don’t fit the usual script for an Indian lender.

Aadhar did not follow the stress narrative that other lenders accepted. In 2025, some housing and small-business lenders reported problems in places like Tirupur, Coimbatore, and Surat—textile and manufacturing towns where informal-income borrowers were said to be struggling. One competitor even claimed that demand for low-ticket housing was slowing in southern India. Aadhar’s management strongly disagreed, quarter after quarter. “There seems to be no slowdown,” CEO Rishi Anand said on the July 2025 earnings call, listing Andhra Pradesh, Telangana, and Tamil Nadu as top-performing states for credit quality. The company kept its total exposure to the three troubled towns below 2% of its loan book, and by early 2026, delinquencies there had actually improved.

Aadhar handled two unexpected events in 2026 without changing its guidance. When conflict started in West Asia, management slowed growth in its riskier, higher-yielding loan-against-property book as a precaution, even though it has almost no exposure to NRI customers who might be directly affected. Then, in the June 2026 quarter, Aadhar changed how it counts a disbursed loan, now recognizing it only after a cheque clears instead of when it is handed over. This made growth appear weak on paper, with disbursements up just 3% year-on-year compared to about 19% under the old method. When an analyst said it had been a tough quarter, Anand immediately corrected him: “It was not a challenging quarter. I think the quarter was good.”

The Catch

Aadhar faces competition from several large, well-funded players. Companies like PNB Housing Finance, Bajaj Housing Finance’s new “Sambhav” range, Godrej Capital, and TruHome Finance have all increased their focus on affordable housing in the past two years. Analysts warn that this could put pressure on Aadhar’s lending margins, although those margins have stayed between 5.7% and 6.0% so far. Management argues that most of the competition is in urban, higher-value “affordable” loans. Meanwhile, Aadhar’s main customers borrow amounts closer to ₹10-15 lakh, a segment where it holds about 18% of the market and faces less new competition. The big question is whether this advantage will last as larger lenders become more aggressive.

Aadhar went public in May 2024, raising about ₹1,000 crore in new capital, which it said was for growth rather than returning money to shareholders. Its capital adequacy ratio is over 42%, which is unusually high, and management has clearly stated that it does not plan to pay dividends or buy back shares soon. The company’s next goal is to reach ₹50,000 crore in assets under management within three years. Since it recently spent a quarter explaining an accounting change instead of a real slowdown, the next few quarters – when disbursement growth is expected to rise above 20% – will show if this target is realistic or just talk.

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