Housing finance firms rally up to 8% as RBI extends co-lending scheme to all NBFCs

Shares of housing finance companies hogged the limelight on Friday after the Reserve Bank of India announced that it will extend the scheme of co-lending to all non-banking financial companies (NBFC).

Cheering the development, housing finance players including LIC Housing Finance, Repco Home Finance, GIC Housing Finance, PNB Housing, Can Fin Home, Indiabulls Housing Finance and HDFC gained between 1.50 per cent and 8 per cent.

The RBI in 2018 had put in place a framework for co-origination of loans by banks and a category of NBFCs for lending to the priority sector, subject to certain conditions.

Based on the feedback received from stakeholders, it has been decided to extend the scheme to all NBFCs, including HFCs, in respect of all eligible priority sector loans, and allow greater operational flexibility to the lending institutions, the RBI said in a release.

There are hopes that the “co-lending model” will help leverage the comparative advantages of banks and NBFCs in a collaborative effort, and improve the flow of credit to the unserved and underserved sectors of the economy.

Commenting on the development, Shishir Baijal, Chairman and Managing Director, Knight Frank India said, rationalisation of risk weights to all new housing loans until March 2022 would give a fillip to housing loan growth. The RBI has also extended the scheme for co-lending to all NBFCs and HFCs, which will ease credit availability for the real estate sector.

Abhimanyu Sofat, Head of Research, IIFL Securities said, “Doubling of the size of open market operations to Rs 20,000 crore, RBI participation in state development loans, allowing co-origination of loans by housing finance companies are combined big-ticket announcements for both bond market and financial sector stocks.”

Private banking majors including HDFC Bank, ICICI Bank and Axis Bank were also up about 3 per cent at around 02.15 pm (IST).