Amid growing concerns about solvency as well as asset-liability mismatch in the shadow banking space following the IL&FS crisis, the National Housing Bank (NHB) has proposed to gradually raise the capital adequacy requirement of housing finance companies (HFCs) to 15% by March 2022 from the current 12%.<\/p>\n
In its proposed amendments to regulations, reviewed by FE, the housing finance regulator has also decided to reduce the limit of borrowings by HFCs to 12 times of their net-owned funds (NOF) by March 2022 from 16 times now.<\/p>\n
Analysts said the proposal on steady improvement in solvency parameters, such as capital adequacy, will ensure HFCs remain in fine shape and their capacity to absorb shock rises.<\/p>\n
Similarly, tightening their borrowing limit will basically prevent HFCs from getting into the unavoidable debt trap where they will ultimately default on their payment obligation, just like some of the IL&FS entities. The proposal to implement the changes fully over a three-year period is aimed at giving HFCs enough time to get their act together and stay afloat, at a time when they are already facing liquidity constraints.<\/p>\n","protected":false},"excerpt":{"rendered":"
Amid growing concerns about solvency as well as asset-liability mismatch in the shadow banking space following the IL&FS crisis, the National Housing Bank (NHB) has proposed to gradually raise the capital adequacy requirement of housing finance companies (HFCs) to 15% by March 2022 from the current 12%. In its proposed amendments to regulations, reviewed by FE, the housing finance regulator has also decided to reduce the limit of borrowings by HFCs to 12 times of their net-owned funds (NOF) by March 2022 from 16 times now. Analysts said the proposal on steady improvement in solvency parameters, such as capital adequacy, […]<\/p>\n","protected":false},"author":39,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[130,197,138],"tags":[],"class_list":["post-262588","post","type-post","status-publish","format-standard","hentry","category-newspapers","category-roads-the-financial-express","category-the-financial-express"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/262588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/39"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=262588"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/262588\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=262588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=262588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=262588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}