housing finance – Save Western OH http://savewesternoh.org/ Fri, 11 Mar 2022 09:11:18 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://savewesternoh.org/wp-content/uploads/2021/08/cropped-icon-32x32.png housing finance – Save Western OH http://savewesternoh.org/ 32 32 Third wave curbs asset growth of housing finance companies by 200 basis points https://savewesternoh.org/third-wave-curbs-asset-growth-of-housing-finance-companies-by-200-basis-points/ Tue, 18 Jan 2022 08:00:00 +0000 https://savewesternoh.org/third-wave-curbs-asset-growth-of-housing-finance-companies-by-200-basis-points/ The third wave of the pandemic could shave 100 to 200 basis points (bps) off growth in housing finance companies (HFCs) assets, Crisil said in a report. “The third wave of the COVID-19 pandemic could reduce up to 200 basis points… [the] base case estimate of 9-11% compound annual growth rate (CAGR) of assets under […]]]>

The third wave of the pandemic could shave 100 to 200 basis points (bps) off growth in housing finance companies (HFCs) assets, Crisil said in a report.

“The third wave of the COVID-19 pandemic could reduce up to 200 basis points… [the] base case estimate of 9-11% compound annual growth rate (CAGR) of assets under management (AUM) of HFCs for fiscal years 2022 and 2023,” the rating agency said in the report.

He said growth would be even higher compared to the 2% average in fiscal years 2020 and 2021, although slower than the broad-based 24% recorded between fiscal years 2011 and 2019. This period had seen a nearly increase in the number of HFCs fueled by equity and debt capital availability.

“The growth this time around will largely come from players with better credit profiles,” Crisil said. “Organic consolidation, which began in fiscal 2019, will continue,” he added.

Of the total HFC AUM of Rs 13.2 lakh crore as of March 31, 2021, home loans constituted the largest segment (71%), followed by wholesale loans (18%) and loans against property (LAP; 11 %).

Krishnan Sitaraman, Senior Director and Deputy Head of Ratings, Crisil Ratings, said: “Real estate lending will be the fastest growing segment as lenders continue to be selective in the non-real estate segment (including wholesale lending and LAP).

“After relatively weak growth in recent years, the home loan segment is expected to register a CAGR of 12-14% in fiscal 2022 and 2023. This will be driven by improving sales, better affordability and a preference for lending. home ownership and larger homes. he said.

“That said, the third wave of the pandemic could reduce this growth by 100 to 200 basis points depending on its spread, intensity and duration,” he added.

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Housing finance companies: HFCs expected to post strong loan growth in Q3, other NBFCs may have a harder time https://savewesternoh.org/housing-finance-companies-hfcs-expected-to-post-strong-loan-growth-in-q3-other-nbfcs-may-have-a-harder-time/ Fri, 07 Jan 2022 08:00:00 +0000 https://savewesternoh.org/housing-finance-companies-hfcs-expected-to-post-strong-loan-growth-in-q3-other-nbfcs-may-have-a-harder-time/ Mumbai: Non-Banking Financial Companies (NBFCs) are expected to post mixed results in the December quarter overall, analysts say. Home finance companies (HFCs) are expected to post strong loan growth, driven by housing demand, while earnings from vehicle finance companies are expected to be subdued due to slow passenger vehicle sales. Microfinance companies, on the other […]]]>
Mumbai: Non-Banking Financial Companies (NBFCs) are expected to post mixed results in the December quarter overall, analysts say.

Home finance companies (HFCs) are expected to post strong loan growth, driven by housing demand, while earnings from vehicle finance companies are expected to be subdued due to slow passenger vehicle sales. Microfinance companies, on the other hand, will be hit by slower collection efficiency, they said.

HFCs, led by HDFC, will continue to outperform as robust loan growth was also supported by improved collection efficiency, analysts said. However, microfinance will continue to face challenges. “Microfinance collection efficiency has been volatile and is likely to be affected due to a resurgence of Covid-19 infections. Some lenders may choose to cancel some old loans during the quarter, which could impact provisions,” said Shreepal Doshi, an analyst at Equirus Securities.

Vehicle finance companies could be hit by weak sales as business volumes in passenger vehicles were hit by chip shortages in the third quarter. “Although medium and heavy commercial volumes have recovered, lenders expect a strong improvement from FY23. Used commercial vehicle disbursements remained at similar levels to the second quarter. Demand for commercial vehicles has improved, but is still far from pre-19 levels,” Motilal Oswal analysts said in a briefing note. With HFCs, Motilal Oswal expects a strong recovery in consumer lending, in line with the recovery in economic activity. He expects Bajaj Finance’s new loan bookings to increase 13% in the quarter, with a reduction in excess liquidity and no significant cancellation of interest income contributing to margins.

Kotak Institutional Equities expects disbursements to be strong for most housing finance companies in the quarter ended Dec. 31, despite weak overall volumes during the holiday season.

Gold lenders are expected to report strong assets under management due to increased footfall, better promotions and high gold prices.

However, even though recoveries have improved due to the easing of restrictions, analysts will remain alert to any impact of stricter asset recognition standards for NBFCs. In November, the Reserve Bank of India instructed NBFCs to move to a daily classification of NPAs from the month-end classification followed by many NBFCs.

Additionally, accounts cannot be upgraded to standard unless dues are fully recovered. These changes bring the asset classification rules of NBFCs in line with those of banks and are likely to increase the non-performing assets (NPA) of these entities.

The central bank also announced new standards for stricter supervision of NBFCs under which these entities will face restrictions on activities if certain parameters such as NPAs and capital adequacy are breached.

These standards will be effective from October 2022 and NBFCs will need to prepare to implement them.

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Why Housing Finance Companies Charge Higher Interest Rates Than Banks https://savewesternoh.org/why-housing-finance-companies-charge-higher-interest-rates-than-banks/ Mon, 06 Dec 2021 08:00:00 +0000 https://savewesternoh.org/why-housing-finance-companies-charge-higher-interest-rates-than-banks/ Home Loan Interest Rates (Banks vs. HFCs/NBFCs): Home loans are provided to customers by banks and some non-bank finance companies (NBFCs) registered as housing finance companies (HFCs). Home loans are provided to customers by nationalized banks and some non-bank finance companies (NBFCs) registered as housing finance companies (HFCs). All these institutions are regulated by the […]]]>

Home Loan Interest Rates (Banks vs. HFCs/NBFCs): Home loans are provided to customers by banks and some non-bank finance companies (NBFCs) registered as housing finance companies (HFCs).

Home loans are provided to customers by nationalized banks and some non-bank finance companies (NBFCs) registered as housing finance companies (HFCs). All these institutions are regulated by the Reserve Bank of India (RBI). However, the interest rate on home loans charged by HFCs is higher than that charged by banks.

According to Finance Minister Nirmala Sitharaman, HFCs charge higher interest rates because they usually raise funds from the market or other lenders. In contrast, banks obtain funds at lower cost because they have access to foreign currency accounts and deposits in zero or zero interest savings accounts. The finance minister said so recently in a written response to a question posed to the Rajya Sabha.

The question asked for the government’s response on: “whether the government is aware that some Non-Banking Financial Corporations (NBFCs) charge about double the interest rate on home loans compared to nationalized banks of people residing in the levels 1,2 and 3 cities.

In response to the query, Sitharaman said, “As informed by the National Housing Bank (NHB), the interest rate charged by HFCs starts from 6.50% per annum As the Reserve Bank of India (RBI) has deregulated interest rates, rates are determined based on Board approved HFC policies. The interest rate charged to an individual borrower depends on various factors such as cost of funds for HFC and other variables which among others include borrower profile, credit history/score, stability income, loan amount, loan term, etc.

“NHB informed that the interest rate charged by these HFCs is generally higher than that charged by banks, as banks have access to current accounts and savings accounts at zero or low interest, which which results in a lower cost of funds for them, whereas HFCs typically raise funds from the market or other lenders,” she added.

The RBI guidelines, issued by circular dated February 17, 2021, cover the regulation of excessive interest charged and the code of fair practice for HFCs.

“In accordance with this circular, the board of directors of each HFC adopts an interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and determines the interest rate to charge for loans and advances Interest rates and risk grading approach, and penalty interest should be disclosed to borrowers in the application form and in the sanction letter in addition to being available on their website web or published in newspapers,” Sitharaman said.

“Furthermore, HFCs have been asked to put in place an internal mechanism to monitor the process and operations to ensure adequate transparency in communications with borrowers,” she added.

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Housing finance companies: HFCs urge RBI to remove strict asset classification guidelines https://savewesternoh.org/housing-finance-companies-hfcs-urge-rbi-to-remove-strict-asset-classification-guidelines/ Thu, 02 Dec 2021 08:00:00 +0000 https://savewesternoh.org/housing-finance-companies-hfcs-urge-rbi-to-remove-strict-asset-classification-guidelines/ [ad_1] Mumbai: The Association of Housing Finance Companies (HFC), the umbrella body for all mortgage lenders, called on Reserve Bank of India Governor Shaktikanta Das and National Housing Bank to remove strict asset classification guidelines recently announced. In a two-page letter, HFCs said the new rules would force a borderline borrower to slip into the […]]]>


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Mumbai: The Association of Housing Finance Companies (HFC), the umbrella body for all mortgage lenders, called on Reserve Bank of India Governor Shaktikanta Das and National Housing Bank to remove strict asset classification guidelines recently announced.

In a two-page letter, HFCs said the new rules would force a borderline borrower to slip into the NPA category, ending payments altogether. Under the new RBI rules, loan accounts can only be upgraded to the NPA “standard” if all interest and principal arrears are paid by the borrower.

“Once a borrower is actually in default of more than 3 IMEs, it is very difficult for them to pay all the overdue IMEs at once and update the account,” HFC said in the letter. “In our experience, borderline borrowers go out of their way to pay for an IME, if only to avoid being classified as an NPA.

HFCs said the new rules would put additional pressure on their capital and lead to higher refinancing costs.

“Even with monthly cash flow and improved loan-to-value ratios, the financial system will end up showing higher NPA levels in an artificial and avoidable way, which will put increased pressure on lender capital,” said mortgage lenders. “All refinancing institutions will ask for more margins to cover the refinancing or ask us to exclude the APN and loans owed from the portfolio offered as collateral, even if the account is mobile.”

Lenders have also argued that since these overdue borrowers will need to be reported to credit reporting bureaus as NPAs, this will cripple them, forcing the borrower into long-term default.

Currently, all 90 Day Past Due Loans (DPDs) should be treated as NPAs. If the borrower brings their loan account below 90 DPD status, non-bank lenders treat the account as a standard asset even though the account may still have past due IMEs. The new RBI rules require NBFCs to treat these accounts as NPAs until the borrower updates the account to pay any IMEs owed.

The banking industry follows an automated system of marking accounts as NPA, under which accounts are marked as NPA on the day the account becomes more than 90 days past due. However, in many NBFCs this ranking is done after the 90 or 180 days have passed.

In general, many non-bank lenders improve NPAs because overdue accounts are reduced to less than 90 days, while banks don’t upgrade an NPA until all overdue amounts are collected. With these changes, standards have become largely congruent between banks and NBFCs.

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Housing finance companies are expected to grow 8-10% in FY 22: Icra https://savewesternoh.org/housing-finance-companies-are-expected-to-grow-8-10-in-fy-22-icra/ Mon, 08 Nov 2021 08:00:00 +0000 https://savewesternoh.org/housing-finance-companies-are-expected-to-grow-8-10-in-fy-22-icra/ [ad_1] Housing finance companies (HFCs) are expected to experience 8-10% growth in fiscal 2022, driven by increased economic demand and increased demand, according to a report. In the first quarter of the current fiscal year, HFCs experienced zero sequential growth in the accounting portfolio, with the second wave of COVID-19 impacting their disbursements and collection […]]]>


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Housing finance companies (HFCs) are expected to experience 8-10% growth in fiscal 2022, driven by increased economic demand and increased demand, according to a report. In the first quarter of the current fiscal year, HFCs experienced zero sequential growth in the accounting portfolio, with the second wave of COVID-19 impacting their disbursements and collection efficiency (CE), the report said. ratings agency Ratings in a report released Monday.

However, collection efficiency started to rebound at the end of June 2021 and improved further in the second quarter of fiscal 2022.

“Strong demand in industry, increasing level of economic activity and increase in immunization in the country are expected to result in steady growth in disbursements and improvement of EB in fiscal year 2022,” said the agency in the report.

Its Vice President and Sector Head (Financial Sector Ratings) Sachin Sachdeva said the overall HFC portfolio in India was estimated at 11 lakh crore as of June 30, 2021, with exposures to home loans (HL), loans Against Property (LAP), Construction Financing (CF) and Discounted Rents (LRD).

COVID-19-induced disruption moderated portfolio growth to 6% in fiscal 2021

“Nonetheless, despite zero sequential growth in the first quarter of FY2022, the aforementioned favorable factors point to better growth prospects for FY2022 with an estimated growth rate of 8-10%,” Sachdeva said.

The report says HFC asset quality metrics weakened significantly in the first quarter of FY2022 due to localized lockdowns imposed by various states / Union Territories (UTs) due to Wave 2, which had an impact on the cash flow of borrowers and therefore on the efficiency of collection.

The surge in arrears was the largest in the recent past, as liquidity at the borrower level stretched in the absence of a loan moratorium, he said.

The gross non-productive assets (GNPA) of HFCs increased to 3.6% as of June 30, 2021, compared to 2.9% as of March 31, 2021 (2.3% as of March 31, 2020). Although asset quality deteriorated across all segments, construction finance was hit the hardest, followed by LAP and HL, the agency said.

He expects an increase of 40 to 70 basis points (net of recoveries and write-offs) in GNPA by March 31, 2022, compared to GNPA at March 31, 2021, assuming there is no more blockages induced by COVID-19.

“Despite improving business in the remainder of FY2022, continued pressures on asset quality would keep credit costs high and hence profitability moderate in FY 2022 for HFCs,” Sachdeva said.

He expects the pre-tax return on average assets under management (PBT percent) for FY2022 to likely remain similar to the FY2021 level (1.9-2 percent).

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Housing finance companies expected to grow 8-10% in fiscal 22, report says https://savewesternoh.org/housing-finance-companies-expected-to-grow-8-10-in-fiscal-22-report-says/ Mon, 08 Nov 2021 08:00:00 +0000 https://savewesternoh.org/housing-finance-companies-expected-to-grow-8-10-in-fiscal-22-report-says/ [ad_1] Housing finance companies (HFCs) are expected to experience 8-10% growth in fiscal 2022, driven by increased economic demand and increased demand, according to a report. In the first quarter of the current fiscal year, HFCs experienced zero sequential growth in the accounting portfolio, with the second wave of COVID-19 impacting their disbursements and collection […]]]>


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Housing finance companies (HFCs) are expected to experience 8-10% growth in fiscal 2022, driven by increased economic demand and increased demand, according to a report.

In the first quarter of the current fiscal year, HFCs experienced zero sequential growth in the accounting portfolio, with the second wave of COVID-19 impacting their disbursements and collection efficiency (CE), the report said. rating agency Icra Ratings in a report released on Monday.

However, collection efficiency started to rebound at the end of June 2021 and improved further in the second quarter of fiscal 2022.

Strong demand in the industry, increasing level of economic activity and increase in immunization in the country are expected to result in steady growth in disbursements and improved CE in fiscal year 2022, said the agency in the report.

Its Vice President and Sector Head (Financial Sector Ratings) Sachin Sachdeva said the overall HFC portfolio in India was estimated at 11 lakh crore as of June 30, 2021, with exposures to home loans (HL), loans Against Property (LAP), Construction Financing (CF) and Discounted Rents (LRD).

COVID-19-induced disruption moderated portfolio growth to 6% in fiscal 2021

Nonetheless, despite zero sequential growth in the first quarter of FY2022, the aforementioned favorable factors point to better growth prospects for FY2022 with an estimated growth rate of 8-10%, Sachdeva said.

The report says HFC asset quality metrics weakened significantly in the first quarter of FY2022 due to localized lockdowns imposed by various states / Union Territories (UTs) due to Wave 2, which had an impact on the cash flow of borrowers and therefore on the efficiency of collection.

The surge in arrears was the largest in the recent past, as liquidity at the borrower level stretched in the absence of a loan moratorium, he said.

The gross non-productive assets (GNPA) of HFCs increased to 3.6% as of June 30, 2021, compared to 2.9% as of March 31, 2021 (2.3% as of March 31, 2020). Although asset quality deteriorated across all segments, construction finance was hit the hardest, followed by LAP and HL, the agency said.

He expects an increase of 40 to 70 basis points (net of recoveries and write-offs) in GNPA by March 31, 2022, compared to GNPA at March 31, 2021, assuming there is no more blockages induced by COVID-19.

Despite improving business in the remainder of FY2022, continued pressures on asset quality would keep credit costs high and hence profitability moderate in FY2022 for HFCs. , said Sachdeva.

He expects the pre-tax return on average assets under management (PBT percent) for FY2022 to likely remain similar to the FY2021 level (1.9-2 percent).

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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RBI Boosts Vigilance With Four-Tier Regulatory Framework For NBFC, Real Estate News, ET RealEstate https://savewesternoh.org/rbi-boosts-vigilance-with-four-tier-regulatory-framework-for-nbfc-real-estate-news-et-realestate/ https://savewesternoh.org/rbi-boosts-vigilance-with-four-tier-regulatory-framework-for-nbfc-real-estate-news-et-realestate/#respond Sat, 23 Oct 2021 04:03:00 +0000 https://savewesternoh.org/rbi-boosts-vigilance-with-four-tier-regulatory-framework-for-nbfc-real-estate-news-et-realestate/ [ad_1] MUMBAI: The Reserve Bank of India (RBI) will put in place a four-tier regulatory structure for non-bank financial corporations to more closely monitor shadow banking and minimize risks to the entire financial system. The detailed set of standards, which will come into effect from October 2022, provide for a scale-based regulatory framework (SBR) that […]]]>


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MUMBAI: The Reserve Bank of India (RBI) will put in place a four-tier regulatory structure for non-bank financial corporations to more closely monitor shadow banking and minimize risks to the entire financial system.

The detailed set of standards, which will come into effect from October 2022, provide for a scale-based regulatory framework (SBR) that takes into account capital requirements, governance standards, prudential regulation and other aspects of non-bank financial corporations (NBFC). .

The central bank’s latest move, after extensive consultations with stakeholders, also comes against the backdrop of past events, including the collapse of IL & FS in 2018 and later DHFL, which had an impact on training on the entire financial system, particularly in terms of liquidity problems. Since then, the focus has shifted to more stringent regulations rather than a light approach for the country’s shadow banking sector.

Unveiling the four-tier framework, RBI said on Friday that over the years, the NBFC industry has undergone tremendous evolution in terms of size, complexity and interconnection within the financial sector.

Many entities have grown and become systemically important, and there is therefore a need to align the regulatory framework of NBFCs taking into account the evolution of their risk profile, he said in a statement.

To begin with, the central bank will publish an integrated regulatory framework for NBFCs, offering a holistic view of the structure of the SBR, a set of new regulations being introduced and the respective timelines.

NBFCs will be divided into four layers: the base layer (BL), the middle layer (ML), the top layer (UL) and the top layer (TL).

The base layer will include NBFCs currently classified as Non-Systemically Important NBFC (NBFC-non-deposits), in addition to Type I NBFCs, non-operational financial holding, NBFC-P2P (Peer to Peer Lending Platform). ) and NBFC-AA (Account aggregator). The asset size threshold for this layer will be less than Rs 1,000 crore.

Currently, the systemic importance threshold is Rs 500 crore.

The middle layer will include all deposit-free NBFCs currently classified as NBFC-ND-SI (company without deposit – systematically large) with an asset size greater than Rs 1,000 crore and all NBFCs accepting deposits, regardless of their size. .

The upper layer will include NBFCs which are specifically identified by the Reserve Bank as warranting an enhanced regulatory requirement based on a set of parameters.

The top ten eligible NBFCs in terms of asset size will always reside in the top layer, regardless of any other factor, RBI said.

“The top layer will ideally remain empty. This layer can be populated if the Reserve Bank is of the opinion that there is a substantial increase in the potential systemic risk of specific NBFCs in the top layer. These NBFCs should move to the top layer. of the top layer, ”he noted.

The regulatory minimum net fund (NOF) for NBFC-Investment and Credit Companies (ICC), NBFC Micro Finance Institution (MFI) and NBFC-Factors would be increased to Rs 10 crore and a trajectory has been drawn to meet this requirement.

However, for NBFC-P2P, NBFC-AA and NBFC without public funds and without client interface, the NOF will continue to be Rs 2 crore.

The current NPA classification standard has been replaced by the over 90 day delay period for all NBFC categories. A descent path is provided to NBFCs in the base layer to adhere to the 90-day NPA standard, the statement said.

In order to improve the quality of regulatory capital, RBI said that NBFC-UL would maintain basic Tier 1 capital of at least 9% of risk-weighted assets, while it would be required to hold a differential provisioning for different categories of standard assets.

In addition to CRAR, NBFC-UL will also be subject to a financial leverage requirement to ensure that its growth is supported by adequate capital, among other factors. An appropriate leverage limit will be prescribed for these entities at a later date as necessary.

According to RBI, housing finance companies would continue to follow specific regulations on exposure to sensitive sectors, as they currently apply.

There will be a ceiling of Rs 1 crore per borrower for the financing of the subscription to the initial public offering (IPO). NBFCs can set more conservative limits, RBI said.

In addition, the central bank has set a significant exposure limit for all counterparties and groups of related counterparties as well as for capital market and commercial real estate.

To strengthen corporate governance, he suggested including independent directors on the board, among other requirements.

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Finance companies sell rupee 25,000 loans in second quarter of fiscal 22, up 65% year on year https://savewesternoh.org/finance-companies-sell-rupee-25000-loans-in-second-quarter-of-fiscal-22-up-65-year-on-year/ Tue, 12 Oct 2021 07:00:00 +0000 https://savewesternoh.org/finance-companies-sell-rupee-25000-loans-in-second-quarter-of-fiscal-22-up-65-year-on-year/ [ad_1] Non-bank finance companies and housing finance companies (HFCs) sold loans worth Rs 25,000 crore through securitization and direct divestiture (DA) in the second quarter (T2FY22), up by 65% compared to the same period last year. Sequentially, the business volume was 45% higher than Rs 17,200 crore in the June 2021 quarter (T1FY22). Reflecting the […]]]>


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Non-bank finance companies and housing finance companies (HFCs) sold loans worth Rs 25,000 crore through securitization and direct divestiture (DA) in the second quarter (T2FY22), up by 65% compared to the same period last year. Sequentially, the business volume was 45% higher than Rs 17,200 crore in the June 2021 quarter (T1FY22).

Reflecting the decline in investor concerns about collections, DA’s share returned to the normal trend of two-thirds of volumes in Q2 FY22, compared to 50% in the quarter ended June 2022 (Q1 FY22). ), according to the Icra rating agency. The split enters through …

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Business Standard has always strived to provide up-to-date information and commentary on developments that matter to you and have broader political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these difficult times resulting from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative views and cutting edge commentary on relevant current issues.
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As we fight the economic impact of the pandemic, we need your support even more so that we can continue to provide you with more quality content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscriptions to our online content can only help us achieve the goals of providing you with even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism to which we are committed.

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First published: Mon 11 October 2021. 17:39 IST

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Affordable Housing Finance Companies Pay the Price of Covid: ICRA https://savewesternoh.org/affordable-housing-finance-companies-pay-the-price-of-covid-icra/ https://savewesternoh.org/affordable-housing-finance-companies-pay-the-price-of-covid-icra/#respond Wed, 06 Oct 2021 07:00:00 +0000 https://savewesternoh.org/affordable-housing-finance-companies-pay-the-price-of-covid-icra/ [ad_1] Affordable housing finance companies that had experienced significantly higher growth than the entire housing finance industry in the past experienced a moderation in growth as a result of the challenges brought about by Covid-19 in the housing environment. ‘exploitation, the rating agency said in its latest report. The growth of the loan portfolio of […]]]>


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Affordable housing finance companies that had experienced significantly higher growth than the entire housing finance industry in the past experienced a moderation in growth as a result of the challenges brought about by Covid-19 in the housing environment. ‘exploitation, the rating agency said in its latest report.

The growth of the loan portfolio of these companies moderated to 10% over one year at the end of the March 2021 quarter due to confinements following wave 2 of the Covid; while the portfolio remained stable at June 30, 2021 compared to March 31, 2021.

“With some improvement in operating environment conditions, demand is expected to accelerate in the following quarters and loan growth could reach 12-15% for fiscal 2022,” said Manushree Saggar, vice -President and Head of Sector – Financial Sector Ratings, ICRA.

The national rating agency noted that with tighter lockdowns in various states during the June quarter, the collections of these affordable housing finance companies were affected. The impact was more visible because unlike the moratorium and a standstill clause on asset classification that were available earlier, there were no such exemptions this time around.

To put this in perspective, the 30-day delay for some of these companies has dropped to 7.2% as of June 30, 2021, compared to 3.2% estimated as of March 31, 2021.

In total, reported gross bad debts (excluding player data) amounted to 2.1% as of June 30, 2021.

“With a steady improvement in collection efficiency since June 2021, the forward movement of the compartment is likely to be contained for most players, although resolution / cancellations may take longer as it it would be difficult for borrowers from these AHFCs to clear multiple payments at the same time, “said Saggar.

The ICRA expects gross bad debt to be between 3.6 and 3.9 percent by the end of March 2022, up from 3.3 percent as of March 31, 2021.

The agency noted that the liquidity profile of these entities should remain comfortable, supported by the significant balance sheet liquidity maintained by these players. At the same time, the availability of lines of finance would be imperative for growth, he said.

“In the long term, the ability to further improve operational efficiency and control credit costs would be imperative to improve performance metrics,” said Saggar.

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Icra Ratings, Real Estate News, ET RealEstate https://savewesternoh.org/icra-ratings-real-estate-news-et-realestate/ https://savewesternoh.org/icra-ratings-real-estate-news-et-realestate/#respond Tue, 14 Sep 2021 07:00:00 +0000 https://savewesternoh.org/icra-ratings-real-estate-news-et-realestate/ [ad_1] MUMBAI: Assets under management of the non-bank financial corporations segment declined in the first quarter of 2021-2022 due to lower disbursements and shrinking portfolio, according to a report. After rising slightly in the third and fourth quarters of FY2021, disbursements for NBFCs and housing finance companies (HFCs) declined again in the first quarter of […]]]>


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MUMBAI: Assets under management of the non-bank financial corporations segment declined in the first quarter of 2021-2022 due to lower disbursements and shrinking portfolio, according to a report.

After rising slightly in the third and fourth quarters of FY2021, disbursements for NBFCs and housing finance companies (HFCs) declined again in the first quarter of FY22, and declined by about 55% on a sequential basis, Icra Ratings said in the report.

“Given these moderate disbursements and the reduction of the portfolio in the absence of any moratorium as in the first quarter of fiscal 2021, the (AUM) of the NBFC segment decreased in the first quarter of fiscal 2022, while HFC AUMs remained stable, ”the agency said.

While sector disbursements picked up quite sharply in July 2021 due to pent-up demand, their sustainability would depend on broader macroeconomic indicators, he added.

According to the agency’s vice president and sector head (financial sector ratings) Manushree Saggar, the second wave temporarily delayed the recovery of the sector.

Icra expects aggregate disbursements for FY2022 to be around 6-8% year-over-year higher, following two consecutive years of year-on-year contraction. the other, she said.

“From an assets under management perspective, the sector is expected to grow 8-10% in fiscal 2022. Growth would be driven by improved demand from all key target segments compared to fiscal year 2021, based on a low base, ”Saggar said.

The quality of assets of non-bank entities weakened quite sharply in the first quarter of fiscal 2022 due to localized lockdowns imposed by various states due to the second wave of COVID-19 infections, which had an impact on the process of collecting these entities, the agency said.

Asset quality figures are expected to moderate as the trend in collection efficiencies (CE) continues to remain encouraging, he added.

The agency maintains its expectation of a 50-100 basis point (bps) increase (net of collections and write-offs) in delinquencies in fiscal year 2022, assuming there are no more lock-ups induced by COVID-19.

As pressures on asset quality persist, the increase in overall provisions, which is currently 1.7 times pre-COVID (December-19) levels, is providing some comfort. This would give entities some leeway. sufficient maneuver to technically amortize and clean up their balance sheets, ”said Saggar.

Depreciation in the NBFC sector remained high in the first quarter of fiscal 2022, she noted.

Given the uncertainties in the operating environment, depreciation is expected to remain high in FY 2022 – similar to last fiscal year (around 2.4% of assets under management for NBFCs and 0.3% for HFCs ), she said.

NBFC credit costs rose sharply in the first quarter of fiscal 2022, with depreciation remaining high and provisions increasing due to rising delinquencies, the agency said.

While HFC’s NPA / Stage 3 also increased during the period, credit costs moderated compared to Q4 FY2021 as provisions did not increase significantly like NBFCs and depreciation was negligible.

As a result, net profits plunged during the quarter to their lowest level in the recent past.

Saggar said that assuming there are no further bottlenecks, NBFC earnings performance is expected to improve in subsequent quarters, as credit costs moderate as delinquencies reduce relative to at June 2021 levels.

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