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Fear of liquidity crunch has gone away from the market, says HDFC

Updated : January 30, 2019 09:31 AM IST

Fear of liquidity crunch has gone away from the market, said Keki Mistry, VC and CEO of HDFC, in an interview with CNBC-TV18, adding that his company did not face any constraint in terms of liquidity in the last quarters.

HDFC posted a weak set of Q3 earnings on Wednesday. The company reported a 60 percent year-on-year (YoY) drop in its net profit at Rs 2,113.8 crore for the third quarter ended December 2018.

“The situation was a little tight in the market. I am talking more as a market player not with reference to HDFC. HDFC, fortunately, never faced any constraint in terms of liquidity whether it was in September or October or November or whenever. September was a period when liquidity in India was tight and as a result of tight liquidity, there were a lot of concerns, some of the non-banking financial companies (NBFCs) stopped lending. That situation has improved dramatically. There was a lot of fear that short-term money had been used to fund long-term assets and this short-term money which is in the form of commercial paper (CP) would come up for maturity and because it came up for maturity, there could be a risk of default and things like that. I think that fear has now gone away,” said Mistry.

Speaking about Bandhan Bank and Gruh Finance merger, said, "We think it is in the best interest of Gruh and for the shareholders of Gruh because it gives Gruh a banking platform. Not only does it give Gruh a banking platform, it also gives them a much larger network of branches from where they can sell or distribute housing loans. So the growth numbers in the coming period after the merger can increase."

Regarding his expectations from Budget 2019, he said, “My sense is that this will be more vote-on-account than any significant changes in the tax laws. I think there will be some focus in the rural markets because the rural markets have been weak and spending in the rural market will ignite growth and that growth will facilitate the entire system and I think there will be something for affordable housing but we have to wait and see.”
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