You are here: Home » Economy & Policy » News
Business Standard

Affordable housing finance cos loan book to grow 17-20% in FY23: Study

Affordable housing finance companies' (AHFCs) loan book is likely to expand by 17-20% in FY23, supported by the government's higher focus on housing and a favourable tax regime, says a report.

housing finance companies | Home loans

Press Trust of India  |  Mumbai 

affordable Housing, budget homes, real estate, residential property

Affordable housing finance companies' (AHFCs) loan book is likely to expand by 17-20 per cent in the current financial year, supported by the government's higher focus on housing and a favourable tax regime, says a report.

As on December 31, 2021, the total loan book of AHFCs stood at Rs 66,221 crore and constituted about 6 per cent of the overall (HFCs) loan book.

"We expect the loan books for affordable (AHFC)s to grow by 17-20 per cent in FY2023, driven by factors like largely under-penetrated market, favourable demographic profile, government trust on housing and a favourable regulatory/tax regime that support the growth outlook," rating agency Icra Ratings said in a recent report.

Its Vice President (Financial Sector Ratings) Manushree Saggar said after witnessing a moderation in the loan book growth in Q1 of FY2022, the growth for AHFCs picked up again in Q2 and Q3 FY2022, with their disbursements reaching 85-90 per cent of the peak levels seen in the fourth quarter of FY2021.

"As a result, the AHFCs reported a 14 per cent (year-on-year) growth as on December 31, 2021. Overall, while the growth has moderated over the long-term average, it continues to remain higher than the overall housing finance industry average," she said.

The agency said the second wave of the Covid-19 pandemic exerted pressure on the asset quality indicators of AHFCs and delinquencies, especially in the softer buckets (0-30, 30-60 and 60-90 days past due, i.e. dpd) shot up significantly.

However, with improvement in collection efficiency in Q2 and Q3 FY2022, the delinquencies in the softer buckets moderated, it said.

At the same time, the reported gross NPAs/stage 3 percentage increased as entities aligned their reporting with the clarification issued by the RBI on Income Recognition, Asset Classification and Provisioning (IRACP) norms.

The 30 days past due for some AHFCs declined from 9 per cent as on June 30, 2021 to 6.8 per cent as on December 31, 2021 while the reported GNPA/Stage 3 percentage marginally increased from 4.2 per cent as on June 30, 2021 to 4.3 per cent as on December 31, 2021, the report said.

With some improvement in operating environment and business outlook, the agency expects that the reported gross NPA/stage 3 percentage will moderate in FY2023, supported by book growth and controlled fresh slippages.

Saggar further said with an expectation of stable net interest margins, higher operating efficiencies with improved scale and moderation in credit costs, the return on assets (RoA) for AHFCs is likely to be between 2.5-2.7 per cent in FY2023.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, May 03 2022. 18:44 IST