Gross NPAs of HFCs likely to worsen sharply in current fiscal

New Delhi: The gross NPAs of housing finance companies (HFCs) is likely to worsen sharply in the current fiscal and go down to 2.5-3 percent levels from an estimated 1.7 percent at the end of March 2020, according to a report by ICRA ratings.

For the non-housing finance companies, the gross NPAs could be as high as 3-4.5 percent at  the end of the current fiscal as compared to an estimated 2.5 percent at the of the last fiscal. 

Around one-third of the portfolio of loans of HFCs' is under moratorium as on 31 May 2020. There is going to a likely impact on the cash-flows the borrowers and that will result in “some more” slippages from these borrowers when the moratorium is lifted.

The self employed borrowers account for as much as 32 percent of the customers HFCs now which was just 25 percent on 31 March 2016. These borrowers were already performing poorer with the gross NPAs percent of this segment being thrice of the salaried segment as on 31 December 2019. 

Liquidity of re-possessed real estate assets may get impacted which will cause a jump in the ultimate losses.