Some NBFCs have already cut back a bit on disbursement targets this year as funding dries up, said experts and company insiders. Growth could be down 200-500 basis points for an industry that was thriving due to a lending slowdown by banks.
“With mutual funds shying away from smaller NBFCs, the sector is likely to report lower growth, and the actual number will depend on how the liquidity situation pans out,” said Karthik Srinivasan, senior vice-president of rating agency Icra. “Going by the current situation, the growth is likely to slow down by 200-300 basis points to 15% for FY19. While market rates are up 80-100 basis points since the beginning of the year, the weighted average cost of funds for NBFCs is expected to rise 50-60 basis points.”
Mumbai-based DHFL has deferred big-ticket loans and is lending only to select customers under the affordable housing scheme. “We have deferred all big-ticket loans while going very selective on affordable housing.
Everybody is slowing their business. Growth will taper down,” a senior executive at DHFL told ET, requesting anonymity.
LENDERS TURN CAUTIOUS
The DHFL executive said the company is trying to sell loan pools to banks in securitisation deals or by way of direct assignment to raise funds. DHFL had a loan book of Rs 1 lakh crore at the end of June. Despite their long-term asset portfolios, housing finance companies depend on bank loans and short-term funds to grow business.
Banks and investors like mutual funds have cut back on funding to non-bank lenders in the wake of last month’s IL&FS crisis.
The National Housing Bank, which regulates specialised housing finance companies (HFCs), has sought details on the financials and cash position of the firms. It is also trying to improve liquidity and announced on Monday that its refinance target for FY19 has been increased to Rs 30,000 crore this year, from Rs 24,000 crore.