Loan defaults on affordable housing rose 7.2% in June: ICRA
Real Estate

Loan defaults on affordable housing rose 7.2% in June: ICRA

Delinquency 30 day plus dues for affordable housing finance companies (AHFCs) increased to 7.2% in June, up from 5.1% in March, as a result of the second wave of the Covid-19 pandemic.

The asset quality had already deteriorated following the first wave of the pandemic in 2020, according to rating agency, Investment Information and Credit Rating Agency of India Limited (ICRA).

Collections for these housing finance companies (HFCs) were hampered in the first quarter of the fiscal year 2021-22 due to stricter lockdowns in various states.

In addition, unlike the bucket movement moratorium and restrictions that were available in Q1 of FY21, there were no such exemptions this time around.

In March 2020, the 30 day plus dues were at 3.2%. In Q1FY22, delinquencies in 90 day plus dues remained under control, which is the threshold for treating loans as non-performing assets (NPAs).

NPAs increased slightly in June to 1.6%, up from 1.3% in March.

According to ICRA, AHFCs have strengthened their balance sheets over the last two fiscal years by increasing provision covers (including management overlays for Covid) across various buckets.

In addition, overall portfolio restructuring has been limited (mostly less than 2%) across players.

Given the secured nature of loans, the ultimate losses to lenders may be limited. For these businesses, write-offs have historically been low (average of 0.5% of assets over 2016-17 to FY21).

As per ICRA, the total loan book of new players in the affordable housing space increased 10% year on year to Rs 60,468 crore as of June 30, citing the growth pattern of AHFCs.

This is a much slower rate of expansion than the previous five-year average of 24%. It represents about 5% of the total HFC loan book of this size.

The long-term growth outlook for affordable housing credit remains positive, thanks to a favourable demographic profile, an underserved market, tax breaks, and the government's push for Housing for All.

ICRA added that access to adequate funding would be critical for these AHFCs to scale up.

Image Source

Also read: Easy finance is the key to the success of affordable housing in India

Delinquency 30 day plus dues for affordable housing finance companies (AHFCs) increased to 7.2% in June, up from 5.1% in March, as a result of the second wave of the Covid-19 pandemic. The asset quality had already deteriorated following the first wave of the pandemic in 2020, according to rating agency, Investment Information and Credit Rating Agency of India Limited (ICRA). Collections for these housing finance companies (HFCs) were hampered in the first quarter of the fiscal year 2021-22 due to stricter lockdowns in various states. In addition, unlike the bucket movement moratorium and restrictions that were available in Q1 of FY21, there were no such exemptions this time around. In March 2020, the 30 day plus dues were at 3.2%. In Q1FY22, delinquencies in 90 day plus dues remained under control, which is the threshold for treating loans as non-performing assets (NPAs). NPAs increased slightly in June to 1.6%, up from 1.3% in March. According to ICRA, AHFCs have strengthened their balance sheets over the last two fiscal years by increasing provision covers (including management overlays for Covid) across various buckets. In addition, overall portfolio restructuring has been limited (mostly less than 2%) across players. Given the secured nature of loans, the ultimate losses to lenders may be limited. For these businesses, write-offs have historically been low (average of 0.5% of assets over 2016-17 to FY21). As per ICRA, the total loan book of new players in the affordable housing space increased 10% year on year to Rs 60,468 crore as of June 30, citing the growth pattern of AHFCs. This is a much slower rate of expansion than the previous five-year average of 24%. It represents about 5% of the total HFC loan book of this size. The long-term growth outlook for affordable housing credit remains positive, thanks to a favourable demographic profile, an underserved market, tax breaks, and the government's push for Housing for All. ICRA added that access to adequate funding would be critical for these AHFCs to scale up. Image Source Also read: Easy finance is the key to the success of affordable housing in India

Next Story
Infrastructure Transport

JNPA Becomes First Indian Port to Cross 10 Million TEU Capacity

The Jawaharlal Nehru Port Authority (JNPA), located at Uran in Navi Mumbai, has become the first port in India to achieve over 10 million TEUs (twenty-foot equivalent units) in container handling capacity.With the recent expansion, the port now operates five container terminals with a combined capacity of 10.4 million TEUs, alongside two liquid and two general cargo terminals.Handling more than half of India’s container traffic, JNPA processed 7.05 million TEUs in 2024 and has moved 15.39 million tonnes of containers and 16.64 million tonnes of total cargo in the first two months of FY 2025â..

Next Story
Infrastructure Transport

Nod for Rs. 36.26 billion Expansion of Pune Metro Line 2

The Union Cabinet has approved the Rs.36.26 billion expansion of Pune Metro Line 2, adding 12.75 km of track and 13 new stations to improve east–west connectivity across the city.The project aims to link Pune’s urban core with rapidly growing suburbs, supporting the city’s rising demand for efficient and sustainable transport solutions. This expansion is part of Corridor 2 of the Pune Metro and includes two key routes: Vanaz to Chandani Chowk (Corridor 2A) and Ramwadi to Wagholi/Vitthalwadi (Corridor 2B).It will connect residential, IT, and educational hubs in areas such as Bavdhan, Koth..

Next Story
Infrastructure Transport

Assembly begins for ‘Nayak’ TBM on Thane– Borivali Twin Tunnel Project

The assembly of ‘Nayak’, the first of four Tunnel Boring Machines (TBMs) for the Thane–Borivali Twin Tube Tunnel Project, has commenced at the Thane site. Built by German firm Herrenknecht AG and deployed by Megha Engineering & Infrastructure (MEIL), the TBM marks a key milestone in Mumbai’s ambitious 11.8-km underground road corridor beneath Sanjay Gandhi National Park.The twin tunnels will reduce the Thane–Borivali travel distance by 12 km and decongest Thane Ghodbunder Road. ‘Nayak’, with a 13.2-metre diameter, is designed to bore through challenging geological conditions ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?