The recent policy  move of the government to  enlarge the role of National Housing Bank (NHB) beyond refinancing of  housing finance companies HFCs and buy equity in some select HFCs, would enhance liquidity position of these housing finance companies, in turn providing a push to affordable housing.

The recent policy initiative follows Rs 10000 crore infusion into eligible housing finance companies to shore up their liquidity and boost flow of funds for affordable housing loans for retail customers in addition to the support being given by the NHB to HFCs through refinancing schemes. Moreover, in the budget, the government had offered a one-time  six month partial guarantee of Rs 1 lakh crore to public sector banks for purchasing consolidated high -rated pooled assets of financially sound NBFCs. And now under the new policy initiative, HFCs are likely to be encouraged to use additional funds to buy equity stakes in some of the housing finance companies.

Says Pradeep Aggarwal, Chairman, Assocham National Council on Real Estate, Housing & Urban Development and Founder & Chairman Signature
Global,”   The equity infusion by the NHB into HFCs would enhance the
ability of liquidity starved housing finance entities to mobilise funds including bank finance. This will in turn bolster the capital base of HFCs , thereby giving a fillip to housing in general and affordable housing in particular”.