NHB intensifies vigil on home loan firms

Following a slew of measures by regulators, the National Housing Bank (NHB), the regulator for housing finance companies (HFCs), has quietly stepped up the monitoring process by introducing a new monthly report format.

Under the new format, each HFCs will have to furnish more granular details about their borrowing pattern, asset-liability mismatches and different sources of funding to NHB on a monthly basis.

Similarly, the average cost associated with each instrument of borrowing should be furnished at the end of every month. Also, respective ratings of each instrument would be required.

“There are new items that have been included in the new format. This will allow NHB for a real-time supervision as access to more dynamic information about the industry will be available,” said an NHB executive.

Earlier, these details were furnished once a year. These steps assume significance as they come in the backdrop of the recently-announced reforms by the Reserve Bank of India in the housing sector related to external commercial borrowing (ECB) and foreign currency convertible bonds (FCCB) norms, which have been relaxed to enable the sector tap cheaper source of funds.

Hence, the new format will help NHB keep an eye on how the funds tapped through these routes are being mobilised.

“It enables assessment of impact of the changing environment conditions on the finances of HFCs and results in better supervisory interventions thereafter,” the executive told Business Standard.

According to another source, NHB has sought details on a monthly basis to keep a tab on the end use of the fund. “Every HFC is complaining about high cost of funds and demanding cheaper refinance. To address these issues, the regulator must be sure about the effective utilisation of funds,” he said.

“After the global crisis, the monitoring measures are being tightened and implemented with more intensity, particularly for sensitive sectors like housing,” he added.