Tag Archives: housing finance companies

blog Real Estate Real Estate News Smart Residential Living

NHB’s revised policy will encourage the housing sector: Crisil

NHB

NHB’s revised policy will encourage the housing sector: Crisil

As per credit rating agency Crisil, the National Housing Bank’s (NHB) revised guidelines for Housing Finance Companies (HFCs) focusing attention on tighter capital will fundamentally strengthen the sector and increase investor confidence at a time of liquidity requirement among non-banks.

Crisil found that 25 companies considering 90% of the industry’s assets are already adhering with the rules by having their core tier-1 capital at 4% points higher.

It further added that a substantial balance sheet and raised capital level will make HFCs better place to sense asset-side risk in the course of time.

In its revised guidelines, the National Housing Bank (NHB) asked Housing Finance Companies (HFCs) to raise the core capital adequacy to 10% from 6% and asked them to raise the overall capital adequacy to 15% from the present requirement of 12% earlier.

The maximum leverage that HFCs can enforce has been decreased to 12 times over a period of 3 years and the overhead deposits that HFCs can put in circulation have been reduced to three times of net owned funds from five times.

According to Crisil, the new measures are not expected to hold down too many players as the mortgage growth expectations also softened.

HFCs have risen at an average of 20% over the past 3 years, even though the drop in growth in the second half of the financial year 2019. Yet if this growth were to be managed over the next couple of years, actual net worth and the internal hike should be sufficient for the majority of players.

Image Sources: Google

Read More
blog Real Estate Real Estate News Smart Residential Living uncategorized

ICRA: NBFC crisis to lower home loan growth for the first time in 3 years

Business_CF

ICRA: NBFC crisis to lower home loan growth

The current liquidity crisis suffered by the Non-banking Financial Companies (NBFC) is expected to lower home loan growth to 13-15% this fiscal, according to a recent report released by rating agency ICRA that is lower than the average of the previous 3 years.

As per the Investment Information and Credit Rating Agency (ICRA), the NBFC liquidity crunch can also have an unfavourable result on outstanding home loans, which reached Rs.19.1 lakh crore as of March 2019.

The overall industry loan growth for Housing Finance Companies (HFC) had backed off to 15% for 2018 financial. It said that the issue with the non-banking lenders since last September that has seen a huge number of companies like DHFL and Reliance Capital suffering has lowered down credit growth of committed housing finance companies to 10% in 2019 fiscal.

Banks developed faster at 19% as against 13%, taking their overall market share to 64% from 62% last fiscal, it stated that the adding banks will lead the growth curve in 2020 fiscal. In any case, given the under-penetration of home loans, the agency expects that development should recover soon. The gross Non-performing Assets (NPA) ratio from the overall housing finance exposures increased to 1.5 in March 2019, from 1.1 last year.

The agency suggested that there could be some pressure on the nature of the assets due to the difficult working conditions and the rising risk factor. The overall NPAs of HFCs will grow to up to 1.8 % due to concerned faced by some developers.

Growth in affordable new housing segment dipped to 4.6 % as of March 2019 from 5% as of December 2018 criticising the same to devalue and sale of NPAs by some players.

 

HFCs would require Rs.4 to 4.5 trillion in Financial Year 2020 to meet the growing necessity of 10 to 14%, adding that companies will have to resort to securitization.

 

Read More