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IBULHSGFIN - Indiabulls Housing Finance News Story

₹187.7 2.8  1.5%

Last Trade - 12/05/21

Sector
Financials
Size
Mid Cap
Market Cap £805.7m
Enterprise Value £6.44bn
Revenue £977.8m
Position in Universe 326th / 3110

UPDATE 1-India govt says some shadow lenders face liquidity stress, puts pressure on RBI to ease

Mon 5th November, 2018 8:50am
* Housing non-banking lenders facing liquidly stress -
official
    * Shares in housing finance lenders fall up to 8 pct on
Monday
    * Govt seeking special liquidity window from the Cbank for
lenders

 (Adds detail, context)
    By Manoj Kumar
    NEW DELHI, Nov 5 (Reuters) - A top Indian government
official on Monday said the nation's non-banking housing finance
companies were facing liquidity stress, in comments that are
likely to put more pressure on the Indian central bank to ease
its policy towards the sector.
    The intervention by Corporate Affairs Secretary Injeti
Srinivas came after Finance Minister Arun Jaitley and other
government officials raised the issue of a liquidity crunch at a
meeting with Reserve Bank of India's (RBI) Governor Urjit Patel
and other regulators last week.
    The government has asked the RBI for a dedicated liquidity
window for these lenders similar to one allowed for the entire
Indian financial sector during the 2008-2009 global financial
crisis. 
    But so far, the central bank has not agreed to the request,
as it fears that such an accommodation to those who haven't been
prudent with their lending will only encourage reckless
behaviour.
    Currently, the shadow banking sector comprising around
11,400 firms with a combined balance-sheet worth over 22
trillion rupees ($301.26 billion) face central bank's
restrictions on borrowings from banks, keeping provisions for
the safety of depositors.  
    The government and the RBI are currently at loggerheads over
a series of issues, including control of its reserves, its power
over the payments system, and monetary policy. 
    "The segment of housing finance within the NBFC (Non banking
finance companies) sector is facing stress of liquidity," 
Srinivas told reporters on Monday, adding the government was
trying to address the issue.
    The sector needs to reassess how it operates, he said noting
there was a need to adopt a sustainable model which could
minimize the mismatch between their borrowing and lending. 
    A string of defaults at one major NBFC, Infrastructure
Leasing and Financial Service Ltd (IL&FS), have triggered sharp
falls in Indian stock and debt markets in recent weeks amid
fears of contagion within the rest of the country's financial
sector.
    Srinivas' comments triggered falls in housing finance
lenders Indiabulls Housing Finance  INBF.NS , Dewan Housing
Finance Corporation  DWNH.NS  and PNB Housing Finance  PNBH.NS ,
which were all down between 3 percent and 8 percent on Monday.
    Srinivas declined to comment when specifically asked about
these companies.
     Securities analysts and economists said while the central
bank was looking for an improvement in governance of lenders
through various restrictions, the government was working on a
piece meal approach to address short term liquidity needs.
    "There seems to be a difference of opinion between the RBI
and the government about the solution strategy," said N.R.
Bhanumurthy, an economist at the National Institute of Public
Finance and Policy, a Delhi-based think-tank.


($1 = 73.0275 Indian rupees)

 (Additional reporting by Manoj Aditi Shah and Krishna Das; 
Editing by Martin Howell & Shri Navaratnam)
 ((manoj.kumar@thomsonreuters.com; +91 11 4954 8029; Reuters
Messaging: manoj.kumar.thomsonreuters.com@reuters.net))
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