HFCs require ₹3.8-4.5 tn to meet refinancing requirements this fiscal: Report

Housing finance companies are likely to see a muted portfolio growth and would require ₹3.8-4.5 trillion to meet their refinancing requirements in the current fiscal, says an Icra report. The pandemic effect is expected to lower the housing credit growth to 5-8% in the financial year 2021, significantly below the last three years’ CAGR of 14%, the report expects. “While portfolio growth for HFCs is expected to be muted, they would require ₹3.8-4.5 trillion to meet refinancing requirements and achieve portfolio growth of up to 5%,” it said. The overall gross non-performing assets of HFCs increased to 2.4% as on March 31, 2020 from 1.6% as on March 31, 2019. Going forward, the net interest margins of the HFCs are expected to remain stable as the cost of funds could moderate. The agency expects the return on assets to remain range-bound between 1% and 1.2% in financial year 2021 with the credit costs expected to be 0.8-1% in financial year 2021 compared to 1.1% last year.