Countdown

  • SENSEX
    NIFTY 50
VIDEOS
Finance

RBI relaxes NBFCs' rules: Biggest beneficiaries will be housing finance companies, says Kotak Mahindra Bank

Updated : November 30, 2018 12:48 PM IST

Housing finance companies are likely to be the biggest beneficiaries of the Reserve Bank of India's (RBI) recent move of relaxing rules for non-banking financial companies (NBFCs) to sell or securitise their loan books, said Kotak Mahindra on Friday.

NBFCs can now securitise loans of more than five-year maturity after holding those for six months on their books, the RBI said. Earlier, they had to hold these assets for at least one year, a banker said.

“It is a positive step but the biggest relief will come to the housing finance companies (HFCs) because they are the companies which hold more than five-year assets. Other NBFCs, probably 8-10 percent of their portfolio will be longer than five-years but HFCs will have largely probably 80-90 percent of their book above five-years,” said KVS Manian, president - corporate, institutional and investment banking of Kotak Mahindra Bank.

“I would think this is a big relief at least for assets like commercial vehicle construction equipment and some portion of the tractors, which we normally do for five years. Definitely it is a big relief in the sense that now you need to hold it only for six months and also that you can retain 20 percent. So I think it should help these kind of high value assets, which normally are given for longer period,” said Ramesh Iyer, VC and MD of M&M Financial Services.

Speaking about the percentage of the book over five years, he added, “I would guess about 8-10 percent of the book and as we get to do more of commercial vehicle construction equipment, that book would possibly grow and it would be a great support to that segment of the product.”
primo org
Have you signed up for Primo, our daily newsletter?
It has all the stories and data on the market, business, economy and tech that you need to know.
cnbc two logos
To keep watching CNBC-TV18, India's No. 1 English Business News Channel, call your Cable or DTH Operator and subscribe now for just Rs. 4 per month. You can also subscribe to CNBC-TV18 Prime HD for Re 1/- per month.Find out more
Live TV