Share of home loans in NBFC stressed assets falls below 2%

Mumbai: What comes as a relief to the mortgage lenders, share of home loan in the NBFCs stressed assets is even less than 2 per cent as of now. Still, it has worried the NBFCs that are active on home loan space.

Neera Saxena, MD & CEO, GIC Housing Finance, told Bizz Buzz, "At GIC HF, our net NPA in home loan is around 2 per cent as at the end of third quarter. Still I believe that it was higher than the industry average and we are making all-out efforts to reduce it by way of restructuring, recovery. The problem was that there are legacy home loans which we find it difficult to resolve." Stressed assets of non-banking financial companies (NBFCs) are expected to reach Rs 1.5-1.8 lakh crore, or 6.0-7.5 per cent of the assets under management (AUM), by the end of the current fiscal, a Crisil report says. The one-time Covid-19 restructuring window, and the micro, small and medium enterprises (MSME) restructuring scheme offered by the Reserve Bank of India (RBI) will limit the reported gross non-performing assets (GNPA), though.

Unlike previous crises, the current challenges on account of the pandemic impacted almost all NBFC asset segments. Operations were curbed the most in the April-June quarter, when disbursements and collections were severely affected by the hard-braking of economic activity, the report adds.

Collection efficiency has improved since then, but it's still some way off pre-pandemic levels in the MSME, unsecured and wholesale segments, given the volatility in underlying borrower cash flows. But some NBFCs have curtailed the impact on asset quality via better risk management and collection processes. Krishnan Sitaraman, Senior Director, Crisil Ratings said: "This fiscal has bought unprecedented challenges to the fore for NBFCs. Collection efficiencies, after deteriorating sharply, have now improved, but are still not at pre-pandemic levels. There is a marked increase in overdue across certain segments and players. Nevertheless, gold loans and home loans should stay resilient, with the least impact among segments."

Alongside wholesale loans (dominated by real estate and structured credit), vehicle finance, MSME finance and unsecured loans have been in spotlight this year due to a rise in stressed assets (see table in annexure). A spokesperson of HDFC said that the share of stressed assets in home loan was still less than 2 per cent.