Dewan Housing Finance is said to have sold about Rs 5,000-7,000 crore of its loans to the State Bank of India (SBI), a transaction that should help restore investor confidence in NBFCs currently battling tight liquidity conditions.
The portfolio included small-ticket quality home loans, yielding regular repayments, three people familiar with the transactions told ET. The loan pricing may be partly higher (about 50 basis points) than the rate at which SBI offers to its own customers.
“DHFL has a large customer base and an expertise with such loans, which would now add value to SBIs large home loan portfolios,” said one of the persons cited above.
DHFL and SBI did not reply to ETs query. Care and Brickworks rated the company triple-A.
Debt market borrowing rates for such housing finance companies as DHFL should stabilise after the current liquidity crunch, dealers said.
Earlier in the day, SBI said it would buy as much as Rs 30,000 crore of additional portfolio this fiscal, up from the initially planned Rs 15,000 crore.
“It will boost investor confidence in the housing finance sector while encouraging other banks to adopt similar action,” said a senior finance executive managing thousands of crores of public money. “It will certainly help ease the perceived liquidity pressure on housing finance companies.”
Market participants are wary of finance firms that are struggling to raise money from the debt markets.
Several non-bank lenders, including housing finance companies, have slowed down loan disbursement and are deferring high-value loans, ET reported earlier on Tuesday. Industry growth could be down 200-500 basis points.
"There is an inherent mismatch between asset and liability in all housing finance companies where average lending is for a period of 12-15 years while they borrow for 7-8 years,” said Rajib De, former vice president at GIC Housing Finance. “Naturally, the gap is filled by unutilised lines of credit from banks and other financial institutions," said De, who has now joined Inditrade Group to head its proposed housing finance subsidiary.
On Monday, the National Housing Bank increased its refinancing facility to Rs 30,000 crore from 24,000 crore.