Treat HFCs on par with private banks: Assocham to Sebi

Apex industry body Assocham has asked market regulator SEBI to treat housing finance companies (HFCs) on par with the private banks and public financial institutions (PFIs).

Assocham (Associated Chambers of Commerce and Industry of India) said in a statement on Tuesday that the move will strengthen the role of HFCs in the government's mission of "Housing for All by 2022".

"Debt investments in HFCs should be exempted from sectoral limits and securities issued under AAA rating for long-term instruments and A1+ for short-term instruments by HFCs should be treated on par with AAA rated securities and certificate of deposits issued by private banks," Assocham said in a communication to the Securities Exchange Board of India (Sebi) Chairman U.K. Sinha.

As specialist housing loan and mortgage financiers, HFCs are an important source of efficient finance for the housing sector with almost 40 per cent share in housing loan market share.

Besides, HFC loan books consist of granular housing loans to individuals backed by houses financed and thus represent one of the safest types of loans, as the non-performing asset (NPA) levels of HFCs are far lower than public and private banks.

Assocham said that mutual fund investments in AAA rated pass through certificates (PTCs) backed by mortgages should not be considered as exposure to the HFCs as these are serviced and secured by underlying pools of granular secured housing loans.

"Considering the government's thrust on finance sector together with crucial role of HFCs, it is surprising to note the Sebi's recent guidelines regarding reducing the additional exposure limit provided to HFCs," the statement added.

--IANS

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