Treat HFCs at par with pvt banks, PFIs: Assocham plea to SEBI

Assocham today sought respite for housing finance companies (HFCs) from markets regulator SEBI with a request to treat them at par with private banks and public financial institutions (PFIs).
"Given the government's focus on housing finance sector and the crucial role played by HFCs within this sector, SEBI's guidelines to mutual funds to reduce the additional exposure limit provided to housing finance companies came to us as a surprise.
"We urge you to kindly consider the socio-economic importance of the housing sector and its role in furthering the government's mission of Housing for All by 2022," Assocham President Sunil Kanoria said in a letter to SEBI chief UK Sinha.

The chamber suggested that mutual fund investments in AAA rated pass through certificates (PTCs) backed by mortgages should not be considered as exposure to the HFC as these are serviced and secured by underlying pools of granular secured housing loans.
It said that HFCs should be treated at par with private banks and PFIs and debt investments in HFCs should be exempted from sectoral limits.
Moreover, 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, it said.

"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," Kanoria said in the letter.
"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, evidently as the non-performing asset (NPA) levels of HFCs are far lower than public and private banks," he added.