The NBFC crisis began due to an asset-liability mismatch, which transformed into a problem of mistrust after IL&FS was downgraded from its former triple A rating.
Bond buyers shunned non-banking lenders with large exposure to housing finance loans leading to a credit crunch.
However Bajaj Finance Ltd. has been one of the top stock performers in India this year, defying drops in peers amid a crisis of bad loans and defaults that has hobbled India’s nonbank financial companies.
Meanwhile The National Housing Bank (NHB) has tightened its rules on leverage and capital adequacy ratio for housing finance companies (HFCs).
The regulatory changes are not likely to impact large HFCs such as Housing Development Finance Corp. (HDFC) and some others.
However it will impact LIC Housing Finance and PNB Housing Finance which have capital adequacy ratio below 15%.
Bond buyers shunned non-banking lenders with large exposure to housing finance loans leading to a credit crunch.
However Bajaj Finance Ltd. has been one of the top stock performers in India this year, defying drops in peers amid a crisis of bad loans and defaults that has hobbled India’s nonbank financial companies.
Bajaj Finance’s stock gains have accelerated more recently, with its 36% advance so far this year topping the benchmark Sensex index.
The company has been helped by its strategy of diversifying into lending to the consumer durables sector as well as rural and medium-sized businesses.
This has limited the company’s exposure to housing finance loans, and kept its bad loan ratio at 1.5% versus 8.8% at Shriram Transport Finance Co. and 9.7% at Mahindra Rural Housing Finance Ltd.
Meanwhile The National Housing Bank (NHB) has tightened its rules on leverage and capital adequacy ratio for housing finance companies (HFCs).
The regulatory changes are not likely to impact large HFCs such as Housing Development Finance Corp. (HDFC) and some others.
However it will impact LIC Housing Finance and PNB Housing Finance which have capital adequacy ratio below 15%.
DISCLAIMER : THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS.
PAST PERFORMANCE IS NOT AN INDICATION OF THE PERFORMANCE OF STOCK IN FUTURE.
