Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now

You can switch off notifications anytime using browser settings.
Stock Analysis, IPO, Mutual Funds, Bonds & More

DHFL arm Aadhar looks to sell loan book to infuse cash

The company has a loan book of Rs 8,700 crore, with disbursement targets of Rs 450-500 crore a month.

, ET Bureau|
Oct 22, 2018, 07.57 AM IST
Aadhar claims to have the highest penetration in the country in the affordable-housing space.
ET Intelligence Group: Aadhar Housing Finance, a unit of Wadhawan Global Capital and a group company linked to Dewan Housing Finance (holds 9.2 per cent), is seeking to sell the majority of its saleable loan portfolio to banks to tide over the liquidity crunch. It is in talks with six banks, including State Bank of India (SBI), Bank of Baroda and ICICI Bank, to sell loans worth Rs 1,200 crore.

“Lack of liquidity due to non-availability of funds from the capital market and banks has slowed our monthly disbursements. In September, we did 25 per cent of our allocated target and in October it may be down to 15 per cent to 20 per cent,” said Deo Shankar Tripathi, CEO, Aadhar Housing Finance, “But we are hoping to get some credit through portfolio assignment to banks,” he added.

The company has a loan book of Rs 8,700 crore, with disbursement targets of Rs 450-500 crore a month. According to the Reserve Bank of India (RBI) and National Housing Bank (NHB) guidelines, HFCs (housing finance companies) can sell only 90 per cent of the loans given out in the last 12 months, and within that too, there are several other criteria.

The company has given out Rs 6,000 crore worth of loans in the last one year. But considering the guidelines and various criteria, Aadhar can sell loans amounting to Rs 1,200 crore, or 14 per cent of the existing loan book.

The company merged with DHFL Vysya last year and is also issuing fixed deposit receipts to enhance liquidity. The pre-merger Aadhar team has been now selling FDs for the first time since merger. The team did not sell fixed deposits earlier and started selling fixed deposit receipts only two months ago.

Total liability from FDs currently is around Rs 150 crore, nearly 2 per cent of the loan book. “We have set higher targets for FDs this year, but it is a small component now,” said Tripathi. But the immediate solution would be the money the company would receive from banks from the portfolio sale.“We expect the money in the next 10 to 15 days,” he said.

The RBI, NHB and SBI earlier said that they would take steps to lessen the credit constraints for non-banking financial companies (NBFCs). SBI also said it would step up its current year’s loan purchase target from NBFCs to Rs 45,000 crore from Rs 15,000 crore earlier.

Last month, Aadhar also tried raising Rs 1,400 crore through NCDs (non convertible debentures) but could manage only Rs 675 crore.

Tripathi also denied reports of global private equity player KKR taking a stake in Aadhar. “As on this morning, there is nothing on the ground that has happened,” he said Sunday.

Aadhar claims to have the highest penetration in the country in the affordable-housing space. It has 315 branches and a presence in 20 states. Average loan ticket size is Rs 8.25 lakh.

DHFL, a group company, has been one of the most affected in the NBFC crisis. In the last one month, the DHFL stock has lost two-thirds its market value.

Also Read

Consumer loans growing but some vintage loans indicate higher risk: CIBIL

Demand for vehicle loan shrinks

Demand for vehicle loan shrinks

Top 10 banks' home loan interest rates

Personal guarantees may aid bad loan resolution

Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links

Follow us on

Download et app

Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service