The National Housing Bank (NHB) is planning to infuse an additional Rs 10,000 crore into the housing finance companies (HFCs). The ministry said that the move would improve the loan lending capacity of the companies in the affordable housing sector, which is expected to ease the slowing of the real estate sector.
To discuss the ongoing liquidity crisis in NBFCs and slowdown in the industry such as automobile, the minister of finance Nirmala Sitharaman will meet the heads of the public and private banks on Monday. One of the main agendas in the discussion will be on credit to priorities sectors such as MSMEs.
The finance ministry in a statement on Friday said “To further ease the flow of funds to the housing sector, the NHB is making available from today, a liquidity infusion facility of Rs 10,000 crore for HFCs as additional liquidity for individual housing loans for affordable housing. This facility will be over and above the two existing refinance schemes of the NHB.”
The finance ministry will also meet the representatives of the different concerned departments for the solutions in the MSME sector, an official said in a briefing. It was also reported that the meetings with the ministries of MSME, Electronics and IT, Corporate Affairs and Commerce, etc.
The recommendations of the UK Sinha committee will be the basis of these meetings. It is reported that an expert panel has made over a hundred essential suggestions. The suggestions cover several domains such as credit, equity funding, legislative changes, a setting up of special funds by the government, amongst others.
Constituted by the Reserve Bank of India, the Sinha commission suggested that doubling of the collateral-free loans under MSMEs and loans under Rs 20 lakh in Mudra Yojana. Creation of a stressed asset fund of Rs 5,000 crore is one of the most important suggestion by the panel. Such a fund will protect the sector from unforeseen distresses.
Infusion of the fund in NHB’s is one of the many steps taken by the government to boost affordable housing in recent times. This step by the government is expected to improve the real estate sector. Recently, the government in the July budget announced an additional deduction of Rs 1.5 lakh on interest paid on loans for affordable housing prices up to Rs 45 lakh.
In March, the GST rate for under-construction for affordable housing was reduced from 8 percent to 1 percent by the GST council. Amongst several sectors which are facing the slowdown, the automobile sector is affected the most.