2019-08-11_Business_Today

by banks) for the rated loan exposure
they have in NBFCs, which means
funds will soon start flowing to NBFCs,”
says Sudheer. “So, your property papers
are safe with NBFCs and HFCs. The
weaker NBFCs will survive as consoli-
dation takes place,” he adds.
Addressing the NBFC liquidity cri-
sis, the finance minister had stated in
the Budget that banks would purchase
`1 lakh crore worth of high quality as-
sets of NBFCs and HFCs in the current
financial year. This will help reduce the
liquidity stress to a large extent, espe-
cially after fund houses curbed their ex-
posure to such debt. The RBI has now
been given complete regulatory control
over HFCs and stronger authority over
NBFCs. It can intervene in their func-
tioning, remove directors, supersede
managements and even order merg-
ers, if needed. So, in cases of distress,
the central bank would come into the
picture to ensure that operations of the
institution are carried on normally, and
interests of both depositors and bor-
rowers are protected.

file is suitable as per a bank/NBFC, the

loan should be transferred,” says Mehra.

Based on your credit profile and the

profile of the property, if you can find

a bank to take on the loan, then that

is the best solution. Getting your loan

refinanced in such a situation through

a public sector bank could be challeng-

ing, so try private banks. If this option

does not work, try the top HFCs.

Matter of Interest

While big NBFCs and HFCs have

enough liquidity, they are not complete-

ly insulated from the crisis and their cost

of funds may rise. They may attract you

at lower rates, but, going forward, you

may have to pay a higher rate compared

to a loan from a bank. Banks are tightly

regulated and have access to low-cost

funds through savings account and cur-

rent account deposits, which NBFCs do

not have.

If you can transfer your loan to a

bank, do so. “NBFCs and HFCs are of-

fering higher rates of interest consid-

ering that their cost of funds is higher.

Customers, if eligible for loans from

banks and top NBFCs, can opt for bal-

ance transfer. This will help them re-

duce the interest outflow and increase

the scope of getting additional funds as

top-up loans,” says Mehra.

What if you can’t transfer to a bank?

Banks typically deny a loan if a borrow-

er’s credit profile does not meet their re-

quirements or there is some issue with

the property. In such a case, NBFCs or

small HFCs are the only option left even

though their interest rates are higher.

Such borrowers can try to transfer their

loan to other HFCs or NBFCs. “There

are NBFCs that support such custom-

ers. There is a gap in rate of interest

between HFCs and NBFCs too. The

smaller ones have higher rates. Hence,

it’s advisable to move to top NBFCs and

HFCs with the loan to reduce the inter-

est burden,” says Mehra.

It will be a while before the liquid-

ity crisis is resolved. If you have a home

loan from an NBFC or HFC and paying

a higher interest rate, look at transfer-

ring it to another lender.

@naveenkumar80

MONEY TODAY > NBFC

In spite of the stress in NBFCs,

home loan borrowers have

little reason to worry.

Illustration by SAFIA ZAHID

By NAVEEN KUMAR

THE

DEFAULT

OPTION

Troubled lenders stop fresh disburs-

als to new borrowers as a step to man-

age their liquidity, but they will keep

servicing the old customers. “Even if the

NBFC’s fresh loan disbursal is paused,

the existing customer’s documents re-

main safe with the organisations. The

service branches remain operational for

them,” says Rishi Mehra, CEO, Wishfin.

To meet their repayment obliga-

tion, most of these lenders have started

selling their loan portfolios, mostly to

banks. If your lender sells your loan to

a bank, your existing lender will remain

the collecting agent of the bank. As a

borrower, you will not face any differ-

ence in terms of repayment and other

services.

Stuck With Partial Disbursement?

Many borrowers have taken construc-

tion-linked home loans or are con-

structing on their own. Their loans may

have been disbursed partially and the

lender may not be giving further funds.

“In such a scenario, if the property is

approved by other lenders and the pro-

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