IGI Logo

Domestic rating agency ICRA Ratings has revised the growth estimate for Housing Finance Companies (HFCs) to 10-12 per cent for FY23 from an earlier projection of 9-11 per cent. It noted that the upwards revision of the growth of HFCs was in expectation of a continued improvement in disbursements. It said after witnessing disruptions in the business volumes, because of the second wave of the pandemic, the industry saw a recovery in the disbursements and HFC's portfolio growth rate started increasing during the last few quarters.

According to the report, the on-book portfolio of the Non-Banking Financial Companies-Housing Finance Companies (NBFC-HFC) sector grew to Rs 12.2 lakh crore as of March 31, 2022, registering 11 per cent year-on-year growth. The growth was slightly better than the agency's growth estimate of 8-10 per cent for FY22. This was driven by the growth in disbursements in the last three quarters of FY22 as the second wave of the pandemic had impacted the business volumes in the first quarter of FY22. The industry also saw a reduction in its Gross Non-Performing Assets (GNPAs) in the fourth quarter of FY22 after having witnessed an increase in the third quarter of same fiscal.

Rating agency further said the tighter regulations (Reserve Bank of India's notification - Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances Clarifications dated November 12, 2021) on the recognition and upgradation of GNPAs led to an increase in GNPAs in the third quarter of FY22. However, it said with the increased recoveries, the industry saw a reduction in GNPAs in the fourth quarter of last fiscal. It witnessed good recoveries from the restructured book and with growth in the Assets Under Management (AUM), the standard restructured book declined to around 1.7 per cent of AUM as on March 31, 2022.