NHB: Housing finance companies must provide a report on their liquidity position


The National Housing Bank (NHB), India’s housing finance regulator, has asked Housing Finance Companies operating in the country to reveal their liquidity status and payment commitments. The regulator has asked companies to file the reports within the next 30 days. It has also asked companies about their plans to raise liquidity in a tight market.

housing finance

According to a report by Economic Times, a CEO of a large housing finance company has revealed this information. The NHB is keen on knowing whether housing finance companies in India have adequate funds for loan disbursements and repayments.

This check by the NHB has come following the liquidity crunch faced by various housing finance companies in India. Asset Liability Management (ALM) of housing finance companies is reviewed by the regulator once every six months. In times of liquidity crunch, the regulator may also match the assets of these companies with their liability profile.

To ease the liquidity pressure for non-banking finance corporations (NBFCs), the Reserve Bank of India raised the single borrower exposure limit from 10% to 15%. The Reserve Bank has also allowed these companies to meet their liquidity requirements by using government securities equal to incremental credit disbursed by them.

The regulatory body has also increased the refinance limit for NBFCs from Rs.24,000 crore to Rs.30,000 crore per year. Many housing finance companies are using commercial papers to raise short-term liquidity for their requirements. Due to the attractive nature of this type of funding, the share of commercial papers in overall borrowing has gone up significantly for NBFCs.

Housing finance companies have been facing certain issues in the market as one of the country’s leading finance company IL&FS defaulted on its payments to lenders. This has triggered panic in the markets. Due to this, NHB has been forced to review the liquidity situation of other companies operating in the market.

Source: Economic Times


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