Mumbai: Shares of non-banking finance companies (NBFCs) and housing finance companies (HFCs) rose on Monday on news reports that the Reserve Bank of India (RBI) will offer them a special credit line to help the sector negotiate the liquidity crisis.
A chief financial officer of a top NBFC said, “Many housing finance companies/NBFCs have been requesting the RBI to provide a credit facility to tide over the current liquidity crisis. The RBI during the Lehman crisis of 2008 had extended its liquidity support to the NBFC sector.”
According to a news report, the RBI is working on a liquidity line and may seek comments on the draft guidelines after election results are declared on May 23.
An India Ratings and Research (IndRa) report said, the current liquidity tightness in the housing finance industry has led to a large number of non-bank entities (both HFCs and NBFCs) curtailing loan disbursements, thereby creating a significant funding crunch in the sector. Tight funding in the housing finance industry has not only impacted fresh loan disbursement but also loans where disbursements are linked to construction. This is impacting a large number of homebuyers who could face challenges to service their commitments to property developers.
