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1.6 Housing Finance Industry
Housing Finance Companies have emerged as important intermediaries in India’s financial
system and play a crucial role in providing financial assistance to the housing segment. At
the end of FY21, the Outstanding Individual Housing Loan of HFCs stood at `7.18 lakh crore
with a Y-o-Y growth rate of 8 per cent.
The COVID-19 pandemic has impacted all the sectors domestically including HFCs. However,
the Reserve Bank of India and the Government took calibrated measures to facilitate the flow
of funds to the sector and to restore the overall financial stability.
The Reserve Bank of India provided support by permitting Commercial Banks to provide
partial credit enhancement to bonds issued by select NBFCs and HFCs, permitting banks
to reckon government securities held by them up to an amount equal to their incremental
outstanding credit to NBFCs and HFCs as Level-1 High Quality Liquid Assets (HQLA), and
increasing the pace and quantum of liquidity infusion via Open Market Operations (OMOs)
and term repos. The list of eligible borrowers for external commercial borrowings (ECBs)
was also expanded to include HFCs and the average maturity requirement for ECBs in the
infrastructure segment was reduced from 5 years to 3 years. These measures, along with
liberal provision of liquidity and policy easing throughout year and refinancing facility for
All India Financial Institutions (AIFIs) helped to stabilise the market financing conditions.
1.6.1 Sources of Funds to HFCs
HFCs were the second largest net borrowers of funds from the financial system, with gross
payables of `6.93 lakh crore and gross receivables of `0.72 lakh crore as at end-March 2021.
(Reserve Bank of India).
During FY21, their borrowing profile was marked by a higher share of borrowings from SCBs
with year-on-year growth of 17 per cent. (Graph: 1.5)
Graph 1.3: Schedule Commercial Bank lending to HFCs.
198 | Annual Report 2020-21
Housing Finance Companies have emerged as important intermediaries in India’s financial
system and play a crucial role in providing financial assistance to the housing segment. At
the end of FY21, the Outstanding Individual Housing Loan of HFCs stood at `7.18 lakh crore
with a Y-o-Y growth rate of 8 per cent.
The COVID-19 pandemic has impacted all the sectors domestically including HFCs. However,
the Reserve Bank of India and the Government took calibrated measures to facilitate the flow
of funds to the sector and to restore the overall financial stability.
The Reserve Bank of India provided support by permitting Commercial Banks to provide
partial credit enhancement to bonds issued by select NBFCs and HFCs, permitting banks
to reckon government securities held by them up to an amount equal to their incremental
outstanding credit to NBFCs and HFCs as Level-1 High Quality Liquid Assets (HQLA), and
increasing the pace and quantum of liquidity infusion via Open Market Operations (OMOs)
and term repos. The list of eligible borrowers for external commercial borrowings (ECBs)
was also expanded to include HFCs and the average maturity requirement for ECBs in the
infrastructure segment was reduced from 5 years to 3 years. These measures, along with
liberal provision of liquidity and policy easing throughout year and refinancing facility for
All India Financial Institutions (AIFIs) helped to stabilise the market financing conditions.
1.6.1 Sources of Funds to HFCs
HFCs were the second largest net borrowers of funds from the financial system, with gross
payables of `6.93 lakh crore and gross receivables of `0.72 lakh crore as at end-March 2021.
(Reserve Bank of India).
During FY21, their borrowing profile was marked by a higher share of borrowings from SCBs
with year-on-year growth of 17 per cent. (Graph: 1.5)
Graph 1.3: Schedule Commercial Bank lending to HFCs.
198 | Annual Report 2020-21
