Covid-19 to impact housing credit growth, dent HFCs: ICRA

New Delhi, Aug 20 : The Covid-19-induced slowdown is likely to pull down the growth of housing credit, thereby impacting housing finance companies (HFC).

As per an ICRA report, the pandemic effect is expected to lower the housing credit growth to 5-8 per cent in FY2021.

“The growth is expected to be slower in H1 FY2021 as disbursements were significantly low in Q1 FY2021 and started picking up from July 2020,” the report said.

“The overall recovery in H2 FY2021 depends on the economic turnaround as some borrowers may defer their home purchases till they are able to achieve stability in their income levels or in the resumption of business activities.”

READ:  Sanjana Ramesh sets 'detailed goals' for NCAA 2020-21 season

According to the report, HFCs are likely to be differentiated on their ability to control fresh slippages amid slowdown in growth and steady easing of funding challenges.

“ICRA notes that the overall on-book housing loan portfolio growth of HFCs and non-banking financial companies (NBFCs) reduced significantly to three per cent Y-o-Y in FY2020 due to funding constraints for a major part of the fiscal,” the report said.

“Supported by portfolio buyouts, banks grew their housing portfolio at 11 per cent in FY2020. The ratings agency estimates the total housing credit at Rs 21.2 lakh crore as on March 31, 2020.”

Accordingly, the overall gross non-performing assets increased to 2.4 per cent as on March 31, 2020 with a sharp deterioration across the wholesale loan construction finance segment, given the tight liquidity situation faced by some developers with delayed projects and the reduced fund availability for the developers, the report said.

Disclaimer: This story is auto-generated from IANS service.

READ:  Jason Derulo feels happy to share his wealth
Subscribe us on The Siasat Daily - Google News
Back to top button