Real-estate developers receive aid from smaller NBFCs/HFCs
Real Estate

Real-estate developers receive aid from smaller NBFCs/HFCs

Smaller non-banking finance companies (NBFCs), which include housing finance companies (HFCs), have stepped up funding to the real-estate sector at a time when bigger players are reluctant. As reported, research conducted by JLL has shown that these companies have lent about Rs 40 billion in the six months after the NBFC crisis.

The developers displayed higher dependence towards NBFCs/HFCs after banks reduced their exposure in the real-estate sector. The structuring of payments along with low cost of funds increased the popularity of NBFCs. Reportedly, from FY 2017-18 to FY 2011-12 the outstanding credit offered by these companies to developers saw an increase of more than 3.5 times to a total of Rs 2,330 billion.

Before the default crisis, the share of the large NBFCs was 50-60 per cent of total lending to real-estate developers. This, however, came to a standstill when the crisis hit as the companies were keener on recovering dues. This was followed by a reorganisation of the asset portfolio, which consisted of lower lending in the sector. 

The NBFC problem still persists but the smaller and medium entities have tried to make up the gap in the market. There has been an active inflow of Rs 0.3-0.7 billion being lent following the brief halt after the crisis. The lending ticket size has, however, considerably decreased from the previous Rs 1.5 billion-and-above mark.

The latest Union Budget seeks to create a provision of Rs 1 trillion, one-time partial credit guarantee to public-sector banks (PSBs). This will enable PSBs to purchase high-rated pooled assets of financially sound NBFCs with provision for the first loss up to 10 per cent. This move will help restore confidence and is likely to iron out the current challenges for the NBFCs and, in turn, help the real-estate sector.

According to Ramesh Nair, CEO & Country Head, JLL India,“NBFCs are likely to face challenges for the next few quarters. The impact of the Government’s measure will take some time to yield results. As a result, NBFCs will witness recovery towards the beginning of the year 2020.”

Smaller non-banking finance companies (NBFCs), which include housing finance companies (HFCs), have stepped up funding to the real-estate sector at a time when bigger players are reluctant. As reported, research conducted by JLL has shown that these companies have lent about Rs 40 billion in the six months after the NBFC crisis.The developers displayed higher dependence towards NBFCs/HFCs after banks reduced their exposure in the real-estate sector. The structuring of payments along with low cost of funds increased the popularity of NBFCs. Reportedly, from FY 2017-18 to FY 2011-12 the outstanding credit offered by these companies to developers saw an increase of more than 3.5 times to a total of Rs 2,330 billion.Before the default crisis, the share of the large NBFCs was 50-60 per cent of total lending to real-estate developers. This, however, came to a standstill when the crisis hit as the companies were keener on recovering dues. This was followed by a reorganisation of the asset portfolio, which consisted of lower lending in the sector. The NBFC problem still persists but the smaller and medium entities have tried to make up the gap in the market. There has been an active inflow of Rs 0.3-0.7 billion being lent following the brief halt after the crisis. The lending ticket size has, however, considerably decreased from the previous Rs 1.5 billion-and-above mark.The latest Union Budget seeks to create a provision of Rs 1 trillion, one-time partial credit guarantee to public-sector banks (PSBs). This will enable PSBs to purchase high-rated pooled assets of financially sound NBFCs with provision for the first loss up to 10 per cent. This move will help restore confidence and is likely to iron out the current challenges for the NBFCs and, in turn, help the real-estate sector.According to Ramesh Nair, CEO & Country Head, JLL India,“NBFCs are likely to face challenges for the next few quarters. The impact of the Government’s measure will take some time to yield results. As a result, NBFCs will witness recovery towards the beginning of the year 2020.”

Next Story
Real Estate

CRDA Approves Rs 17.32 Bn Tenders for Housing and Infra

The Capital Region Development Authority (CRDA), during its forty-seventh meeting chaired by Chief Minister N. Chandrababu Naidu, approved tenders worth Rs 17.32 billion to develop key infrastructure in Amaravati’s core capital area.Municipal Administration and Urban Development Minister Ponguru Narayana announced that Rs 5.14 billion was sanctioned for completing gazetted officers’ towers initiated between 2014 and 2019. In addition, Rs 1.94 billion was approved for external infrastructure, Rs 5.07 billion for nine towers for non-gazetted employees, and Rs 5.17 billion for twelve new towe..

Next Story
Real Estate

Prestige Estates Nets Rs 30 Bn in NCR Debut Launch

Prestige Estates Projects Limited has recorded sales of over Rs 30 billion within one week of launching its first residential project in the National Capital Region (NCR). The project, The Prestige City, located in Indirapuram Extension on National Highway twenty-four, sold one thousand two hundred units during its initial launch phase.This marks the Bengaluru-based developer’s maiden entry into NCR’s residential real estate market. The company attributes the strong response to brand trust, strategic location, and rising demand for premium, planned communities.The launch covered two reside..

Next Story
Infrastructure Transport

Palakkad Railway Division Upgrades Turnouts for Safety

The Southern Railway’s Palakkad Division has implemented a series of infrastructure upgrades to enhance train safety and operational efficiency. Over the past one year, the division has replaced one hundred thirty-three ageing fifty-two kilogram turnouts with robust sixty kilogram Thick Web Switches, engineered for high-speed durability and increased strength.Seventy-seven track layouts were corrected using advanced computer-based geometry solutions, involving precise longitudinal and lateral alignment with the aid of the T-28 Track Relaying Machine. These corrections improve track stability..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?