Home finance companies reluctant to lend builders

Home finance companies reluctant to lend builders
04/11/2016 , by , in ALLIED

Home finance companies may be the toast on stock exchanges, but they are going slow in lending to struggling builders and small companies.

Indiabulls Housing Finance, which was among the pioneers in the LAP segment, has decided to reduce its exposure and assess risks that it writes in its books.

India Ratings had said in a report that delinquencies may significantly increase in the next four quarters. “Delinquencies may even exceed 5% on a static basis for a few non-bank financial institutions (NBFCs), about three times those in FY14,” the report had said. “Signs of early stress are visible in the LAP business loan pools assessed by Ind-Ra, indicated by a sharp rise in 90 days past due (dpd) delinquencies for some of the large players.” Housing finance companies are worried over a combination of stagnant property prices, especially in metros and large cities, which are the primary markets for medium and large-ticket LAP. There’s a fear that squeeze on refinancing due to risk aversion building up in some financiers is bringing stress to the fore. Bajaj Finance has cut its loan against property business, and it is down 5% over the previous quarter.

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