Moneycontrol
Last Updated : Oct 19, 2018 07:07 PM IST | Source: Moneycontrol.com

Indiabulls Housing hits 21-month low, sinks 17% despite clarification on developer loan portfolio

Indiabulls Housing Finance's today's fall was on top of 34 percent correction seen from the beginning of calendar year.

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Indiabulls Housing Finance shares crashed 17 percent to hit fresh 21-month low despite management clarification on developer loan portfolio and RBI easing liquidity coverage ratio norms.

The stock closed at Rs 654.25 on the BSE.

Today's fall was on top of 34 percent correction seen from the beginning of calendar year.

Indiabulls Housing Finance has come out with a clarification note on its developer loan portfolio, which said:

1> The portfolio comprises of leading developers only in the metro cities of the National Capital Region [NCR], Mumbai Metropolitan Region [MMR], Chennai, Bangalore, Pune and Hyderabad.

2> Every developer in the portfolio has multiple lending relationships with leading banks, private equity partners and financial institutions. Not a single developer in its portfolio has had Indiabulls Housing Finance Ltd. as its sole lender.

3> Majority of the portfolio is backed by lease rental discounting assets with leading multinational companies and Indian corporates as the tenants of the building. Such leased rental assets are cross-collateralized with construction-linked loans of the developers.

4> The average Loan-to-Value [LTV] in the developer portfolio is 43 percent

5> The collateral of leased buildings, ready apartments and under-construction apartments are mortgaged with Indiabulls Housing Finance on exclusive basis. Indiabulls Housing Finance does not give any loans on pari passu charge with any other lenders.

6> Indiabulls Housing Finance originates these loans directly and neither does it buy developer loans from other lenders nor does it sell its developer loans to other lenders.

7> Every loan in the developer portfolio has dedicated escrow accounts with exclusive charge of Indiabulls Housing Finance into which cash flows are directly deposited by either tenants occupying the buildings, or home buyers in the construction-linked loans.

8> The developer has no control whatsoever on the cash flows being received in the escrow account with Indiabulls Housing Finance directly from the tenants of the building or from the home buyers in an under-construction project till such time the Indiabulls Housing Finance's loan is paid back in full.

Meanwhile, the Reserve Bank of India (RBI) has allowed banks to use government securities equal to their incremental outstanding credit to non-bank lenders, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements.

Non-bank lenders include all non-banking financial companies (NBFCs) and housing finance companies (HFCs). The above provision will be available with immediate effect and till December 31 this year, the central bank said in a notification.

Liquidity coverage ratio refers to highly liquid assets that financial institutions need to hold in order to meet short-term obligations.

Banks' statutory liquidity ratio under FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio) is currently 13 percent of their net demand and time liability (NDTL). The new provision will be over and above this limit.

The announcement comes at a time when NBFCs and HFCs are suffering a confidence crisis due to growing fears of them not having enough cash to repay their debt. The crisis started after a series of defaults by Infrastructure Leasing & Financial Services (IL&FS) and its subsidiaries in early September.

In addition to this, the central bank also increased the single-borrower exposure limit for NBFCs that do not lend to the infrastructure sector to 15 percent of their capital funds from 10 percent earlier.
First Published on Oct 19, 2018 01:18 pm
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