New Scheme Launched To Boost Liquidity For Housing Finance System

In order to boost liquidity in to the housing finance system, and to augment demand of housing finance companies (HFC), the National Housing Bank (NHB) launched a scheme titled Liquidity Infusion Facility (LIFT) to address the issue. The objective of the scheme is to support HFCs to create individual housing loan portfolio under priority sector. This in turn would act as a catalyst to raise more resources from banks or the debt market. The total amount allocated for this scheme is Rs. 10,000 crore. The scheme is valid till June-end, 2020. That said, the HFCs which are registered with HNB with a minimum internal ration of “B” are eligible to avail the facility.  

“NHB's announcement on infusion of 10,000 crore liquidity in HFCs in addition to normal refinance is well timed and a highly encouraging move to provide some liquidity but more importantly instilling confidence in the banking sector for HFCs. By all means, the decision of NHB will be very helpful to revive the sentiments of all stakeholders-HFCs, loan seekers and the developers,” said Deo Shankar Tripathi, MD and CEO of Aadhar Housing Finance.  

However some market experts feel that the scheme may bring some respite for the smaller HFCs with lower gearing, as the cap of 15 per cent of net owned fund (NOF) on the facility would leave little room for HFCs with lower NOF. “The liquidity infusion scheme aims to relive smaller HFCs, whose disbursements had moderated over the last financial year. However, the scheme may not prove to be a major breather for the HFCs on the liquidity front, as the Rs 500 crore limit on the capital available for each HFC may turn to be inadequate. The upper limit set is far less than the average monthly disbursements of large HFCs,” said an analyst at CARE Ratings.