Nomura analysts said the Reserve Bank of India and the government would need to segregate the potential solvency issue at DHFL from liquidity issues at other larger wholesale NBFCs and HFCs.
Observing that MSME sector plays an important role in the growth of the Indian economy, RBI said the restructuring of the borrower account has been extended by further one year to March 31, 2021.
According to ICRA, even in a high-growth scenario, wherein the second half of FY20 sees the incremental bank credit rise to Rs 6.5-7 trn, there will still be a 40-45% year-on-year decline.
Housing finance companies (HFCs), which rely heavily on banks for funds, have said that loans taken by them should be exempted from the proposed base rate system.
During the fourth quarter (January-March), banks step up the activity to meet annual targets. This leads to a race to raise funds from markets often by jacking up deposit rates. This time around, the market has not seen such trend yet.
Also build a contingency fund equal to 9 to 12 months of expenses.
RBI has appointed R Subramaniakumar, the ex-managing director of Indian Overseas Bank as the administrator of the third largest pureplay mortgage lender.
Say cost of funds too high to lower lending rates.
According to the amendment adopted by nations, developed countries will reduce HFCs use first, followed by China along with a large number of countries.
These decisions by NHB will come into effect immediately and will cover all housing finance companies including LIC housing finance.
Banks and housing finance companies (HFCs) are trying to figure out their exposure to real estate projects in Noida Extension, which have come under cloud after courts cancelled land acquisition in several villages by Greater Noida authorities.
The bi-annual financial stability report noted that failure of an NBFC with the maximum capacity to cause solvency losses to the banking system will lead to a loss of 2.5 per cent of the total tier-I capital of the banking system.
There has been a "sharp decline" in collection efficiencies in retail asset pools across asset classes in May due to the second wave of the pandemic, with microlenders witnessing a dip of up to 20 per cent, a report said on Monday. "ICRA has observed a sharp decline in the collections of its rated securitisation transactions in April 2021 (i.e. May 2021 payouts), following the rise of COVID-19 cases and imposition of lockdowns/movement restrictions which has impacted the operations and collection activities of the NBFCs and HFCs," the report from domestic rating agency ICRA said. A major part of the country was undergoing localised lockdowns till May-end in the second wave, which saw new cases top 4.14 lakh and resulted in over 4,500 deaths daily at its peak.
With public sector banks reducing interest rates on home loans up to Rs 20 lakh (Rs 2 million), housing finance companies (HFCs) might be under pressure to follow suit in order to stay competitive.
In yet another move to close the regulatory gap between banks and shadow banks, the Reserve Bank of India (RBI) has mandated exposure limits to the non-banking finance companies, in line with commercial banks. In the large exposure framework released on Tuesday, the regulator capped aggregrate exposure of NBFCs which are in the upper layer toward one entity at 20 per cent of capital base. The limit can only be extended by another 5% with board's approval. For a particular borrower group, the cap is at 25 per cent, with additional 10 per cent if exposure is towards infrastructure.
Finance Minister Nirmala Sitharaman on Friday announced a slew of measures to boost economic growth and address distress in various sectors
.jpg)
India and China are the growing market for these gases
Bargaining for a lower processing fee is also possible if the borrower has already got his loan approved from one HFC but decides to shift to another HFC for actual disbursal.
But there are challenges, observes Tamal Bandyopadhyay.
Of these 26, Bajaj Finance, Associated Alcohols and Breweries, Garware Technologies, Filatex India, Tasty Bite Eatables, Aarti Industries and GMM Pfaudler saw an over 10-fold surge in price since 2014.
'Q1 is going to bear the brunt of the second wave, exposing full-year GDP forecasts to downward revisions, unless phase-3 of vaccination is executed quickly.'
The problem for the NBFC sector is the funding inertia by banks and not lack of funds.
Expressing his satisfaction over the government's move to slash fiscal deficit target, Das said it will help improve investment by the private sector as crowding out impact will be less.
A credit report is an accumulation of all your loan accounts, loan repayment history, and delinquencies, if any.
'Slower-than-anticipated recovery can be a bigger risk this time than a liquidity-driven event -- at least for India.'
Experts say this is a good time to buy a house for self-use, points out Sanjay Kumar Singh.
Amid slowdown blues, the government has unveiled a raft of measures over the past few months aimed at improving liquidity in the system, moderating interest rates as well as credit growth apart from addressing stress in the NBFC sector.
New borrowers should go for banks over housing finance companies as the new benchmark -- MCLR -- is more transparent.
Finance Minister Nirmala Sitharaman on Thursday said the Indian economy is witnessing a strong recovery after a long and strict lockdown. Addressing a press conference to announce more stimulus measures to boost growth, she said macro-economic indicators are pointing towards recovery. She noted that COVID-19 active cases have declined from over 10 lakh to 4.89 lakh with case fatality rate (CFR) at 1.47 per cent.
You can always prepay the loan and/or switch to another financier
The RBI has this year cut interest rates by 110 basis points in four instalments but banks have passed only a part of it to borrowers. Before the last reduction earlier this month of 35 basis points, the bank on an average had passed only 29 basis points out of 75 basis points cut affected during 2019.
Most NBFCs will have to slow down their loan growth. Some of the most leveraged will have to sell a part of their assets (or loan book) to banks to raise incremental capital. Others may have to knock on the door of their deep-pocketed parents.
The government was keen that HFCs did not use the special window at a low rate and offered loans at very high rates. On 5 December, the Reserve Bank of India announced a refinance window for the HFCs, under which Rs 4,000 crore was made available to them from NHB at a concessional rate of 8 per cent.
'In the short-term, the markets may be affected' by the review but 'it will help address what they are worried about which is why we need transparency,' says former chief economic advisor.
Owing to the risk perception attached with the segment by banks, the residential realty segment has been increasingly relying on non-banking financial companies and housing finance companies to raise debt financing, reports Abhijit Lele.
'The banking sector appears to be on course to recovery,' declares the RBI governor.
If you have availed a home loan from an NBFC, you can shift your existing home loan to a bank and benefit from the MCLR regime, suggests Ratan Choudhary, head - home loans, Paisabazaar.com.
How housing finance companies evaluate individuals who are employed 'on contract basis' and the rationale behind it.
© 2026 Rediff.com - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances