National Housing Bank Sets 0.4% Loan as Buffer
The National Housing Bank (NHB) raises provisioning requirement for doubtful assets up to 100%, asks housing finance companies to set aside 0.4% loans as buffer. The new guidelines are aimed at protecting the health of HFCs when concerns over possible asset quality deterioration increases manifold amid rising interest rates, but industry captains said their prising interest rates will come under severe strain this year.
Market leader Housing Finance Development Corporation (HDFC) said it will not be impacted by the new set of norms. “Historically, we keep excess provisions so there will be no impact on our profitability,” HDFC vice chairman & CEO Keki Mistry told ET. HDFC has provided 1,173 crore for the June quarter against the requirement of 840 crore.
NHB chairman and managing director RV Verma reported saying “Given such a scenario, the likelihood of delinquency rising can’t be ruled out. So we thought it would be prudent to impose stricter provisioning norms to give a signal to our members,”. NHB regulates 55 HFCs with a 35% share of the 5.3 lakh crore housing loan market.
CEO, HFC, Housing loan market, Interest rates, Loans, National Housing Bank, NHB, Provisioning norms, Rising interest rates
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