The tight liquidity environment in the second half of fiscal 2018-19 saw housing finance companies (HFCs) lowering their disbursements and augmenting their portfolio sales through securitisation. In a recent report, rating agency Icra estimates that the on-book housing loan portfolio growth for HFCs and non-banking finance companies (NBFCs) reduced to 9% year on year for the year ended March 31, 2019. Banks took note of this opportunity as they increased their retail home loan portfolios to 19% in FY2019 as against 13% in FY2018.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

This resulted in a modest shift in the market share, with the bank's market share increasing to 64% as on March 31, 2019, from 62% as on March 31, 2018, and the trend is expected to continue for a couple of quarters.

The liquidity crisis has impacted the growth plans of most HFCs, with the on-book portfolio growth is at 10% in FY2019, and some of them witnessed a decline in their portfolios as well. Gross NPAs increased to 1.5% as on March 31, 2019, from 1.1% as on March 31, 2018.

Given the tough operating environment, the rating agency expects housing credit growth in FY2020 to be in the range of 13-15%, lower than the last three years' CAGR of 17%.

Banks are expected to grow at a faster pace than HFCs. As some HFCs aim to go slow on construction finance to conserve liquidity, the growth in non-housing loans is expected to be even lower.