How These Two Housing Financiers Plan To Wade Through Covid-19 Disruption
PNB Housing and Can Fin Homes are taking measures to safeguard their companies against bad loans.
Housing financiers PNB Housing Ltd. and Can Fin Homes Ltd. are taking measures to safeguard their companies against bad loans which are expected to rise in an industry struggling under moratoriums and unpaid installments.
PNB Housing, for instance, banks on selling more of its corporate developer loans to ensure absolute non-performing assets for the segment doesn’t rise further. “We wont be disbursing more in the segment for the foreseeable future and we certainly don’t intend to sell some portion of this asset in the next few weeks,” Kapish Jain, its chief financial officer, told BloombergQuint in an interview.
The company has already sold Rs 2,300 crore of corporate loans in financial year 2019-20, he said. The retail segment of loans, however—especially the ones taken by salaried professionals—are safe according to Jain. “Among all the liabilities the most prioritised one would be home loans,” he said. While the industry will see a rise in bad loans, PNB Housing Finance doesn’t expect to be impacted by it.
This comes at a time when lending companies have been put under moratorium by the Reserve Bank of India for six months to ease the financial burden on EMI-paying individuals. For the first three months, 50% of India’s loan book was under the mortatorium, raising concerns of possible bad loans if borrowers are unable to pay the accrued installments. However, only 30% of the loan book has availed of the option delay payments, Jain said.
To be sure, housing financiers are expected to be relatively better among non-bank lenders, according to most brokerages including Centrum Broking and Edelweiss Research.
Even so, the sector will still feel some pain, according to Girish Kousgi, managing director of Can Fin Homes. He plans to focus on maintaining the company’s asset quality over liquidity or growth, which will be “key for companies to survive”.
“Asset quality is definitely going to be a challenge for everyone; it's about the degree of challenge,” Kousgi said.
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