Page 18 - Banking Finance September 2019

HOUSING

Govt to provide addi- Fin Min infuses Rs 10,000 crore in NBFCs
tional 20k crore liquidity An additional Rs 10,000 crore has been infused in NBFCs in order to improve
flow of funds for housing loans, said a statement re-
support to NBFCs leased by finance ministry. "To further ease flow of

In an aim of reviving the Non-Bank- funds to the housing sector, the NHB is making avail-
ing Finance Companies (NBFCs), Fi- able from today, a liquidity infusion facility of Rs
nance Minister Nirmala Sitharaman 10,000 crore for Housing Finance Companies (HFCs)
has announced a slew of measures. as additional liquidity for individual housing loans, for
According to the measures, the Na- affordable housing," the statement said.
tional Housing Bank (NHB) can now This facility will be over and above the existing finance schemes of the housing
extend up to Rs 30,000 crore credit sector regulator NHB. The statement further underscored subsequent to the
lines to NBFCs, instead of Rs 10,000 budgetary announcements, the RBI has issued a slew of measures for banks to
crore earlier. avail additional liquidity of Rs 1.34 lakh crore.
The Finance Minister said that the "Now...the backstop guarantee to banks for NBFC portfolios taken over by them
Partial Credit Guarantee Scheme for has become effective. Banks will be utilising this guarantee support as per the
purchase of pooled assets of NBFC/ contours of the scheme," it said.
housing finance companies (HFCs) to
Finance Minister Nirmala Sitharaman had announced in the Budget that the
up to Rs 1 lakh crore will be moni-
government would provide one-time six months partial credit guarantee to public
tored at the highest level in each
sector banks for the "first loss of up to 10%" to enable them purchase pooled
bank. “NBFCs (may get) a breather
as they are likely to resume efforts assets of financially sound NBFCs amounting to Rs 1 lakh crore.
towards new business expansion "This would ease the liquidity stress in the NBFC sector and increase the access
ahead of a busy festive season,” said of these NBFCs to bank finance, and, in turn, enable them to continue to play
Umesh Revankar, CEO, Shriram their role in meeting the financing requirement of the productive sector of
Transport Finance. economy," the ministry added.
“Liquidity will definitely improve eas- Meanwhile, the government has received a proposal from the Reserve Bank on
ing the tight situation past 11 the draft modalities of the guarantee to operationalise the Budget announce-
months. Investor sentiment would ment. The ministry further informed that government has accorded its approval
revive now for NBFCs,” said Vishal to the modalities that would be set in motion by the RBI. "The Department of
Kampani, Managing Director, JM Fi- Financial Services would put in place an oversight mechanism for the scheme,"
nancial group. it added.
“It is prompt start as the finance
minister has clearly taken cognisance Bank of Baroda likely to buy around Rs 6000 from fund-
of industry concerns. Expected mea- starved NBFCs
sures for HFCs and contruction fi- According to a senior official source, Bank of Baroda is planning to buy assets
nancing would give relief to housing worth around Rs 6,000 crore from the fund-starved
sector.”
non-banking finance companies this quarter. In the June
“The announcement of co-origination quarter, the bank had already bought around Rs 3,500
between banks and NBFCs is an en- crore loans from NBFCs, while for the year March 2019,
couraging move,” said Jaspal Bindra, it had purchased assets worth around Rs 10,000 crore
chairman at Centrum group. “The from NBFCs/housing finance companies.
key lies in executive of those mea- "We are expecting to do around Rs 6,000 crore (asset purchases under direct
sures,” he added. Sitharaman also assignment) this quarter," Executive Director Papia Sengupta said. According
emphasized on future collaborations
to the statement of an official, the bank is in talks with NBFCs/HFCs such as PNB
between banks and NBFC in originat- Housing Finance, Indiabulls Consumer Finance, IIFFL, Annapoorna MFI among
ing new consumer loans.
others for this.

18 | 2019 | SEPTEMBER | BANKING FINANCE