{"id":17557,"date":"2019-05-25T17:05:55","date_gmt":"2019-05-25T11:35:55","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=17557"},"modified":"2019-06-27T16:57:54","modified_gmt":"2019-06-27T11:27:54","slug":"loan-disbursement-by-housing-finance-companies-have-slowed-down","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/loan-disbursement-by-housing-finance-companies-have-slowed-down\/","title":{"rendered":"Loan Disbursement by Housing Finance Companies Have Slowed Down"},"content":{"rendered":"<p>Loan Disbursement by Housing Finance Companies has made housing credit facility more affordable, and the activities of housing finance companies are based on the regulatory framework issued by RBI.<\/p>\n\n\n\n<p>RBI has issued statutory directive by keeping in view the objective of\nthe NHFP (National housing finance policy) issued by the central government by\nintroducing the Housing Finance Allocation, where the banks are playing a vital\nrole in disbursing the loan to provide credit to the housing sector.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the Housing Finance Company?<\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/Loan-Disbursement-by-Housing-Finance-Companies.png\" alt=\"Loan Disbursement by Housing Finance Companies\" class=\"wp-image-17563\" width=\"540\" height=\"476\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/Loan-Disbursement-by-Housing-Finance-Companies.png 629w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/Loan-Disbursement-by-Housing-Finance-Companies-300x265.png 300w\" sizes=\"(max-width: 540px) 100vw, 540px\"\/><\/figure><\/div>\n\n\n\n<p>Housing Finance Company are companies regulated under the guidelines issued by the <a href=\"https:\/\/www.rbi.org.in\/\">RBI<\/a> and is another form of <a href=\"https:\/\/enterslice.com\/nbfc-registration\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"NBFC (opens in a new tab)\"><a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;NBFC&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Non-Banking Financial Companies (NBFC) operate similarly to banks but do not possess the legal status of a bank. Registered under the Companies Act 2013 and governed by the RBI Act&amp;#039;s section(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/nbfc\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>NBFC<\/a><\/a> with the principal business of acquisition Finances and construction of the house which includes- <\/p>\n\n\n\n<ul><li>Direct and indirect financing for apartments<\/li><li>Developments of plots of lands.<\/li><li>Construction of New Houses<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Functions Performed by The Housing Finance Companies for Loan Disbursement<\/h2>\n\n\n\n<p>Housing Finance companies are encouraging the potential buyers to serve credit facility for housing finance by providing-<\/p>\n\n\n\n<ul><li>Promotional\nand Development facility<\/li><li>Regulatory\nAssistance<\/li><li>Financial\ncredibility.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Loan Disbursement by Housing Finance Companies Have Slowed Down<\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/1.jpg\" alt=\"Functions Performed by The Housing Finance Companies\" class=\"wp-image-17564\" width=\"435\" height=\"435\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/1.jpg 626w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/1-150x150.jpg 150w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/1-300x300.jpg 300w\" sizes=\"(max-width: 435px) 100vw, 435px\"\/><\/figure><\/div>\n\n\n\n<p>Housing finance companies are facing under way challenges in various sectors like <a href=\"https:\/\/enterslice.com\/msme-registration\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"SME (opens in a new tab)\">SME<\/a>(Small medium enterprise) and real estate which as a result lead HFC to put pressure on their margins and to reassess plan of loan growth. <\/p>\n\n\n\n<p>The impact of\nslowing down the loan disbursement by the housing finance company is not only\naffecting the Real state sector but also-<\/p>\n\n\n\n<ul><li>Retail home loan borrowers<\/li><li>The applicant of the fresh loan disbursement<\/li><li><a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Property&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Property refers to the legal designation of ownership over valuable items or assets held by an individual or a business. This ownership grants the holder certain legal rights to use, consume,(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/property\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>Property<\/a> developers<\/li><li>Underlying projects of Construction sites.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Consequences of Slowing Down of Loan Disbursement by Housing Finance Companies<\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/2.jpg\" alt=\"\" class=\"wp-image-17565\" width=\"376\" height=\"376\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/2.jpg 626w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/2-150x150.jpg 150w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/2-300x300.jpg 300w\" sizes=\"(max-width: 376px) 100vw, 376px\"\/><\/figure><\/div>\n\n\n\n<p>In the present scenario, the systematic rise in borrowing rate has\naffected the business of housing loan which as a consequence resulted in the\nfollowing-<\/p>\n\n\n\n<ul><li>Large Housing Finance Companies borrowing\ncost could be upwards of MCLR (Marginal cost of funds-based lending rate) of\nBanks.<\/li><li>Banks are highly competitive, which has led\nin narrowing of margin in housing loans in Medium to large scale sector.<\/li><li>Housing Finance Company&rsquo;s reassessing loan\ngrowth plans by putting pressure on their margins as the challenges in SME, and\nreal state sectors are high.<\/li><li>Significant rise in funding cost and\nasset-liability mismatches.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Relevant Facts about Disbursement of the Loan by Home Finance Company<\/h2>\n\n\n\n<ul><li>Disbursement of the loan in 4 quarters, i.e., September 2018 is averaged 25000 crores per month for 6 HFCs players dealing on a large scale.<\/li><li>Mitigation of risk by HFCs player by expanding their Non-housing books at a higher rate than pure housing loan books.<\/li><li>Moderation of housing loan growth in Q3 FINANCIAL YEAR 2019-<\/li><li>14% on year to year <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Basis&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;In finance, the &amp;quot;basis&amp;quot; is a term with several applications, including representing the difference between the spot price and the future contract price of an asset, which is vital in investment(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/basis\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>basis<\/a><\/li><li>3.5% on quarter to quarter basis.<\/li><li>Average disbursement of loan fell to 13,500 crores following September 2018 statistics.<\/li><li>Risk approach of low rated HFCs has increased as per their funding profiles.<\/li><\/ul>\n\n\n\n<p>Housing finance sector continues a material impact on the construction\nprogress and the risk in the <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Market&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A market is a structured environment, either physical or virtual, where buyers and sellers convene to trade goods and services. This trading hub operates based on the principles of supply and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/market\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>market<\/a> in terms of borrowing rate has affected the\nbusiness of housing loan. <\/p>\n\n\n\n<p>The mismatch of asset-liabilities has resulted in restricted financing\nfrom both the market-based sources and banks.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Challenges Faced By Housing Finance Companies<\/h2>\n\n\n\n<p>Challenges are faced by the <a href=\"https:\/\/enterslice.com\/learning\/housing-finance-companies\/housing-finance-companies-2\/\">Housing Finance Companies<\/a> which have increased the risk factor in the business of housing loan.<\/p>\n\n\n\n<p>As a result of which HFCs has emphasized on short term funding to reduce\nthe funding cost.<\/p>\n\n\n\n<p>The liquidity crunch in Housing Finance company has varied the duration of lending and funding, which lead to the mismatch of asset -liability thrust.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" loading=\"lazy\" width=\"686\" height=\"345\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/Statistics-of-Housing-Finance-Company.png\" alt=\"Statistics of Housing Finance Company\" class=\"wp-image-17561\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/Statistics-of-Housing-Finance-Company.png 686w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/Statistics-of-Housing-Finance-Company-300x151.png 300w\" sizes=\"(max-width: 686px) 100vw, 686px\"\/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Dual Impact on Both Builders And Borrowers<\/h2>\n\n\n\n<p>The lending and funding\napproach in the housing finance sectors has cut down the loan disbursement,\nwhich led to HFCs and NBFCs to decrease the fresh loan disbursement as well as\nthe running loan relating to construction. <\/p>\n\n\n\n<p>Buyers of Home Loan can\nface challenges in executing the services to be rendered to the property\ndevelopers.<\/p>\n\n\n\n<p>The duration of HFC\nlending is for long period but now the duration of funding is for 3-4 years\nwhich has created an asset-liability gap and maintaining this gap through short\nterm funding in less time is the big challenge.<\/p>\n\n\n\n<p>For Instance-The disbursement of PNB Housing Finance&rsquo;s disbursement come down quarter on quarter due to a loophole in the lease rental discounting agreement.<\/p>\n\n\n\n<div class=\"shadow1\"><blockquote class=\"wp-block-quote\"><em>Sriram Transport Finance, Pnb Housing Finance, Lic Housing, Mahindra Finance faced disbursement growth decline and margin contracts due to the rising cost of funds.<\/em><\/blockquote><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>Housing Finance Company and NBFCs are facing the liquidity crisis from past few years especially in 2018 because of this Credit rating is of utmost importance for NBFCs and Housing Finance Companies and generating the liquidity NBFCs are relying mainly on bank funding, i.e., Term loans and portfolio selling. <\/p>\n\n\n\n<p>RBI is now considering to strict the regulation to strengthen the financial markets, and NHB is by using specified rules in the housing finance companies is trying to improve the liquidity status to refinance the target for the fiscal year 2019. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Loan Disbursement by Housing Finance Companies has made housing credit facility more affordable, and the activities of housing finance companies are based on the regulatory framework issued by RBI. RBI has issued statutory directive by keeping in view the objective of the NHFP (National housing finance policy) issued by the central government by introducing the [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":17577,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2367],"tags":[332,1164,2374],"acf":{"service_id":"103"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Loan Disbursement by Housing Finance Companies Have Slowed Down -<\/title>\n<meta name=\"description\" content=\"Loan Disbursement by Housing Finance Companies slowed down and made housing credit affordable.Housing loan sector is benefits from this move of HFC&#039;s.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/loan-disbursement-by-housing-finance-companies-have-slowed-down\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Loan Disbursement by Housing Finance Companies Have Slowed Down -\" \/>\n<meta property=\"og:description\" content=\"Loan Disbursement by Housing Finance Companies slowed down and made housing credit affordable.Housing loan sector is benefits from this move of HFC&#039;s.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/loan-disbursement-by-housing-finance-companies-have-slowed-down\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:author\" content=\"enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-05-25T11:35:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-06-27T11:27:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/Loan-Disbursement-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"700\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Narendra Kumar","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/04\/nk-1.jpg","authorDescription":"Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.","postViews":433,"readingTime":3,"nextPost":{"id":17747,"slug":"important-enquiries-about-the-psara-license-2005"},"prevPost":{"id":17480,"slug":"designation-hierarchy-private-limited-company"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/05\/Loan-Disbursement-1.jpg","postTerms":"Housing Finance Companies","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/17557"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=17557"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/17557\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/17577"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=17557"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=17557"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=17557"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}