Comments
Total housing credit growth slowed to 16 per cent in 2016-17 from 19 per cent in 2015-16, with the overall housing credit standing at ₹14.4 lakh crore as on March 31, 2017 (₹12.4 lakh crore as on March 31, 2016).
According to ICRA’s June report on ‘Trends in housing credit’, while the slowdown was across both housing finance companies (HFCs) and banks, the decline in the pace of growth was higher for banks — to 15 per cent for FY17 from 18 per cent in FY16 — largely because they were operationally tied up in H2 FY17 on account of demonetisation.
The growth in the sector was also impacted by a slowdown in new project launches with buyers and investors deferring their home purchase decisions in expectation of a decline in real estate prices.
Rohit Inamdar, Senior Vice-President and Group Head, Financial Sector Ratings, ICRA, said, “HFCs operating in the affordable housing space, with a total portfolio of ₹1.2 lakh crore, continued to grow at a faster pace of 28 per cent in FY17 compared to the industry. “These HFCs’ growth was supported by an increase in affordable housing projects, the infrastructure status accorded to the sector, and the improved borrower affordability supported by lower interest rates and capital subsidy through the credit-linked subsidy scheme. ICRA expects affordable housing finance to continue to outpace the industry, going forward as well.”
HFCs’ asset quality remained comfortable with gross non-performing assets (NPAs) of 0.84 per cent as on March 31, 2017.
Smaller HFCs with a higher share of self-employed customers had reported an increase in gross NPAs in Q3 FY17 with borrower cash-flows being impacted by demonetisation; the asset quality however improved in Q4.
Large HFCs continued to rely more on debt market instruments and fixed deposits for meeting their funding requirements. While bank borrowings and debt market instruments continued to account for a sizeable share of the overall funding for small HFCs, these entities were also able to draw substantial funding from National Housing Bank.
The overall cost of funds for HFCs moderated to 8.08 per cent in Q4 FY17 from 8.48 per cent in Q3 FY17 owing to softening of interest rates and the higher share of debt market borrowings.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.