The agency has thus downgraded the NFBC sector’s mid-year outlook from stable to negative as potential defaults may further weaken wholesale NBFCs and HFCs, which are already facing a crisis
The move comes on the heels of a 20 percent tax on share buybacks imposed by the Finance Ministry in Budget 2019 and is apparently aimed at providing a correct picture of companies’ leverage status.
RBI's relaxation would primarily benefit HFCs where the loan tenure is typically more than 5 years with greater proportion HFCs’ loan book now becoming eligible for securitisation.
Apart from liquidity issues, at present, the NBFC industry is also grappling with concerns around the recovery of cash flow in their business. Some banks have also withdrawn their already-sanctioned limits to curtail further financing due to fears of them defaulting.
The bonds would be of 10-year maturity, with a yield of 9.5-10 percent
We see HDFC as one of the key beneficiaries of liquidity shift towards strong and top quality names and expect it to accelerate market share gain.
Nervousness in the stock market and fears of a liquidity squeeze for NBFCs creating solvency issues for real estate players are the reasons for the free fall in NBFC shares post Supertech’s default.
At the time when the NBFC sector is grappling with funding issue, IBHF is guiding for medium term loan growth of 20-25 percent which clearly signals its relatively strong liquidity position.
NHB is the principal agency to promote the 97 housing finance companies in the country and to provide financial support to eligible institutions.
With diversified funding mix and positive asset liability gap, Aavas Financiers is relatively well placed in current environment of heightened funding concerns.
Source and cost of funding are vital for NBFCs. While the cost is going up, there seems to be some pressure on source of funds at the moment.
The lending rates are also likely to go up, but the pace and intensity of the increase in rates will depend on product competitiveness, existing interest rates, and a company's dominance in the industry, rating agency Crisil said in its report.
The bank will also offer customers credit facilities under the schemes of repair and renovation to damaged houses and overdraft facility against the existing housing loans to meet the urgent fund requirements.
India's surprise decision to agree to phase-down the use of a potent greenhouse gas after years of opposition is a "significant step" toward global action to address climate change, the US State Department's climate change envoy said Friday.
It estimated the total housing credit outstanding as of December 2013 at over Rs 8.6 trillion (Rs 8.6 lakh crore) as against Rs 7.5 trillion as of March 2013.
HDFC's Keki Mistry believes RBI is unlikely to reduce policy rates in its July policy. But higher current account deficit and free fall in the rupee's rate against the US dollar would weigh on the RBI's policy decisions, he says.
South-based DHFL Vysya Housing Finance, an associate company of Dewan Housing (DHFL), has decided to reduce the interest rate in 0.2-0.5 percent range on housing loans from April 1 while aiming for 50 percent growth during 2013-14.
Given the need for specialized participants in housing finance focused on smaller towns and unexplored customer segments the norm of Rs 300 crore net owned funds may be brought down to Rs 100 crore. This will ensure long term resources and affordable cost for mid level HFCs more focused on the target customer segments.
Sudhin Choksey, MD of Gruh Finance feels the RBI initiative will certainly benefit the company as the funds flowing from the banks would now be considered for the priority sector.
The National Housing Bank (NHB), the regulator for HFCs, is likely to introduce a scheme of mortgage guarantee cover, which will ensure higher credit availability for home loan borrowers. Given its implementation, all HFCs will now have bigger room to disburse home loans that also may be at a slightly cheaper rate.
It appears so. The National Housing Bank (NHB), the apex body of housing finance companies (HFCs) has decided to earmark Rs 5,000 crore, the amount that the Union Budget 2012 allowed it to raise through tax free infra bonds, to medium and low income housing schemes.
National Housing Bank (NHB) is worried over supply side constraints for affordable housing projects. The apex body for housing finance companies (HFCs) expects the government to facilitate construction and supply of low and moderately priced houses on mass scale.
A high demand for refinancing has prompted the National Housing Bank (NHB) to revive its fund raising plan through bond issues. According to R H Verma, Chairman & Managing Director of the apex body of housing finance companies (HFCs), it is planning to raise Rs 500 crore, to support its rising requirement of funds.
Following footsteps of its parent Reserve Bank of India, the National Housing Bank which regulates HFCs, too is planning to waive pre-payment charges on housing loans.