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Last Updated : Sep 12, 2019 06:00 PM IST | Source: Moneycontrol.com

National Housing Bank may soon acquire stakes in HFCs: Report

The move could enable such HFCs, which have lately been cash-strapped, to mobilise funds.

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Representative image

The National Housing Bank (NHB) might soon pick up stakes in some housing finance companies (HFCs) to enable the cash-strapped entities to mobilise funds, according to a Financial Express report.

NHB was the regulator for HFCs until the Reserve Bank of India brought it under its direct oversight after the government announced the change in the last Union Budget

"As it is not a regulator anymore, NHB should take equity in HFCs. Such a move will improve governance and give confidence to banks and other lenders to give liquidity support to HFCs," former NHB chairman RV Verma told FE.

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The government has been considering several measures to give a boost to the real-estate sector which has been reeling under debts and stalled projects. Finance Minister Nirmala Sitharaman is expected to announce a host of steps to help revive the country's debt-ridden housing sector.

In addition to this, to facilitate faster clearance of of inventories with real estate developers via deep discounts to homebuyers, banks may also be asked to ease their loan contracts with the developers.

Earlier in August, the NHB received the Cabinet's nod for an extra Rs 10,000 crore infusion into certain HFCs as a means to improve their liquidity and aid a better flow of funds available for the affordable housing loans section.

Sources also told the paper that the NHB might have to use its additional funds to acquire equity in eligible HFCs. It is believed that having an NHB presence on HFC boards would improve their governance. This would also strengthen their capital base, much more than the refinancing route would.

However, according to CNBC-TV18, a Finance Ministry official said that the NHB's role is of a refinance agency. Hence, there is no rationale behind the NHB buying equity in HFCs.

(This copy has been updated with the latest developments.)

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First Published on Sep 12, 2019 04:56 pm
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