Call to exclude MFs’ investment in housing finance cos from NBFC tag

| | Updated on: Jul 12, 2012

Industry Association Assocham wants SEBI to exclude mutual fund investments in housing finance companies (HFCs) as an NBFC sector investment.

Assocham wants SEBI to classify HFCs as a separate sector.

“Housing Finance Companies make housing loans available to the masses at low interest rates of 10.5 per cent a year, leading to fulfilment of the social objective of increase in home ownership,” said Mr D.S. Rawat, Secretary General, Assocham.”

“With mutual funds being an important funding source for HFCs, they should be considered separate sector as a low yield of 10.5 per cent cannot compete with high yielding NBFC paper,” said Mr. Rawat.

Another reason why HFCs should be out of the NBFC sectoral-cap was that they fulfilled a social objective of increasing home ownership, said Assocham.

“These loans increase demand for new homes, reduce housing shortage and support industries such as cement, steel and other construction related ancillary industries,” Mr Rawat added.

The current urban housing shortage in India is estimated at 26.53 million units. The approximate annual home loan disbursement is pegged at Rs 1.8 lakh crore.

Published on July 12, 2012

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