NEW DELHI/MUMBAI: Just when the non-banking financial companies (NBFC) were returning to a sense of normalcy and trying to raise money through non-convertible debentures, commercial papers (CP) and various instruments, stock prices took a knock on Monday. Share prices of Housing Finance Companies (HFC) especially, slipped after Corporate Affairs Secretary Injeti Srinivas said they were facing liquidity stress and there was a need to review their funding model.
“The segment of housing finance within the NBFC sector is facing stress of liquidity,” Srinivas said, adding that the government was trying to address the issue. Srinivas’ comments triggered a fall in stocks of Indiabulls Housing Finance, Dewan Housing Finance Corporation and PNB Housing Finance, which were all down between 3 per cent and 8 per cent.
Srinivas declined to comment when specifically asked about these firms. Interestingly, his comments come at a time when the HFCs are already recovering from their initial lows. From HFC sources to SBI chairman admit that things today are much better than what they were three weeks ago.
Earlier in the day, DHFL, one of India’s leading HFCs, said it has repaid a CP worth `1,775 crore on Monday. “Since September 21, 2018, (DHFL) has repaid CP holders `9,465 crore including buyback of CP worth `3,240 crore. DHFL has either repaid or offered to buy back all CPs maturing till November 15, 2018. DHFL has provided for CP maturing till November 30, 2018,” it said.
“In spite of the current tight market scenario our company has successfully raised funds through CPs aggregating to `1,775 crore at competitive rates. These borrowings in the present environment exhibit the trust and faith of the lender community in PNB Housing Finance Limited,” said Sanjaya Gupta, MD, PNB Housing Finance Limited.
While NBFCs have actively lobbied for liquidity-easing measures after the September debacle and the IL&FS crisis, RBI too had put in place measures that were in some ways opening up the bank finance to these companies. However, the comment that was aimed at putting pressure on RBI to ease its policy seems to have misfired. Sources at NBFC said instead of improving the situation, the comments could put them in trouble.