National Housing Bank proposes easing of capital adequacy ratios for housing finance companies

Keki Mistry, vice-chairman and CEO, HDFC Ltd said, “I think something like this was not unexpected. Once the IL&FS crisis happened, one thought that there would be some regulatory restriction that will be put on how much leverage housing finance company or for that matter a NBFC can take and maybe a hike in the capital adequacy ratio.”

He said, “Our capital adequacy is extremely high and as far as leveraging is concerned, our debt-equity ratio was 4.7 times whereas borrowing up to 12 times the net owned fund is allowed. So, it doesn’t impact us even marginally but some of the highly leveraged housing finance companies may be impacted.”