The liquidity crisis post the IL&FS default has hit the assets under management (AUM) of Housing Finance Companies (HFC) and also curtailed their disbursements, a report by rating agency Crisil said, adding that it expects growth to revive to 12 per cent to 14 per cent for these companies in the current and next fiscal.

This growth would however be lower than in the past, Crisil said, adding that it would be supported by mid-teens growth for the two largest players, constituting more than 50 per cent of the industry AUM.

While the rating agency expects the long-term growth prospects for these companies to remain intact, it said that the asset liability maturity management and liquidity conservation would remain front and centre for the next few quarters.

Further regulatory action could also be expected on the liquidity front with the Reserve Bank of India (RBI) already having issued draft guidelines for Non-Banking Financial Companies on liquidity risk management framework. “Nevertheless, CRISIL believes HFCs with strong parentage and those with robust risk management systems and processes will be able to navigate the current environment better,” it said.

Year of contrast

Noting that 2018-19 was a year of contrasting halves, the rating agency said, “The first half saw stable growth and comfortable access to funding, with AUM growing at an annualised rate of nearly 21 per cent. However, the second half brought a reversal of sorts with AUM growth plunging to about 10 per cent.”

The industry AUM stood at ₹12.4 lakh crore as on March 31, 2019, up 16 per cent year-on-year.

Among the HFC segments, the distinction between the two halves was the sharpest for non-housing loans, where the growth fell to five per cent in the second half of the fiscal, it noted, adding that housing loans, grew better at 13 per cent annually in the same period.

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