The HFCs (housing finance companies) in India would be enjoying a growth of 8% to 10% in the first fiscal in 2022. As per a report, higher demand and increased economic activities would be triggering this growth. These companies, in the first quarter of the present fiscal, did not register much growth as the second wave of the pandemic affected the collection and disbursement efficiency. However, the collection efficiency bounced back in June 2021, and further improved throughout the second quarter of FY22.
The good demand in the industry, better economic activities, and more vaccination in India would lead to a faster growth in the coming months. This would also be accompanied with the growth in disbursements and enhancements in the CE in FY22.
In June 2021, the overall on-book portfolio of the Indian housing finance companies stood at INR 11 lakh crore. The exposures were across loans against property, home loans, lease rental discounting, and construction finance. The portfolio grew by just 6% in FY2021 due to the disruptions caused by the pandemic. Even though the growth has been low this year, several factors indicate a positive growth in FY 2022.
According to a report, the asset quality metrics of the assets of the housing finance companies weakened in the first quarter sharply. Throughout the country, there were localized lockdowns. Several states and union territories had imposed these lockdowns in the wake of the second wave of the pandemic. This significantly affected the cash flows of the borrowers, and ultimately, the collection efficiency of the companies.
In the recent past, there was a sharp jump in the overdue. As the loan moratorium was absent, the liquidity level of the borrowers was stretched to 3.6% in June 2021. In March, the same year, it was around 2.9%. Across industry segments, the asset quality deteriorated. While construction finance took most of the burn, home loans and loans against property were also affected.
