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NHB Doubles Housing Finance Funds
6 Oct
Summary
- National Housing Bank plans to double funds for housing finance firms.
- This aims to provide cheaper, long-term financing options.
- It may reduce reliance on bank loans for housing finance companies.
The National Housing Bank (NHB) is set to significantly increase its funding for large housing finance companies (HFCs), potentially doubling the available refinance and affordable housing funds for the current fiscal year. This strategic move addresses repeated requests from HFCs seeking more cost-effective, long-term financing solutions.
Several prominent HFCs, including LIC Housing Finance, Bajaj Housing Finance, and PNB Housing Finance, are anticipated to benefit from this enhanced support. The primary objective behind this expansion of NHB's financial assistance is to enable these companies to diversify their funding sources.
By offering refinance at approximately 7.65% and affordable housing funds at about 4.25%, NHB provides options that are considerably cheaper than comparable bank loans. This allows HFCs to reduce their reliance on banks, especially when banks approach their internal exposure limits for lending to NBFCs and HFCs.
This initiative is expected to contribute to the growth of housing loans. NHB's increased allocation could meet a larger percentage of HFCs' borrowing needs, supporting their expansion while mitigating dependence on bank borrowings. The institution's AAA credit rating further solidifies its role as a stable financial partner.
