NHB's liquidity facility not much help to sustain small HFCs: Official

Liquidity infusion facility by the NHB would not be of much help to sustain small housing finance companies (HFCs), an official said on Saturday.

In order to boost the affordable housing sector, the government should support small HFCs which have been facing liquidity crunch, Aadhar Housing Finance MD and CEO Deo Shankar Tripathi said.

Union Finance Ministry on Friday said the National Housing Bank (NHB) was infusing an additional Rs 10,000 crore in NBFCs with a view to improve flow of funds for housing loans.

"Based on the 15 per cent of net owned fund (NOF) criterion, the amount available to HFCs having NOF of Rs 50 crore or Rs 200 crore will be inadequate. These small companies cater mostly to informal sector," Aadhar Housing Finance MD and CEO Deo Shankar Tripathi said.

Most of the 100 odd HFCs have NOF between Rs 50 and 200 crore and they will get anywhere between Rs 7.5 crore and Rs 30 crore based on the 15 per cent of NOF formula, he said.

Tripathi, however, applauded the liquidity infusion move by the NHB.

Elaborating the grim situation of lending by HFCs, he said only a handful of small HFCs are actively lending at present.

He suggested that NHB may consider increasing the NOF criterion to at least 40-50 per cent keeping the other criteria same or even reduce the upper limit of 500 crore to Rs 400 crore.

"Otherwise, this benefit will go to the bigger HFCs which are less affected by liquidity crunch," he said.

Speaking on Aadhar Housing Finance, Tripathi said its NOF has jumped to Rs 1,700 crore as on June 2019, compared to Rs 865 crore in March 2019 after the takeover by global investment firm Blackstone.

In June, Blackstone had announced that private equity funds managed by it have acquired a 97.7 per cent stake in Aadhar Housing Finance.