HUDCO, Indiabulls Housing shares jump after NHB proposes to raise capital adequacy ratio

DHFL shares surged 20 percent after independent chartered accountancy firm TP Ostwal gave a clean chit to the company in connection with Cobrapost's allegations of financial fraud.

As per the NHB guidelines, the regulator wants to raise the CAR level to 13 percent by March 2020, 14 percent by March 2021 and 15 percent by March 2022. CAR is a measure of its capital and is expressed in a percentage of risk-weighted assets.

CAR is one of the vital parameters from the point of view of solvency of HFCs and their protection from untoward events which arise as a result of liquidity risk as well as the credit risk that the HFCs are exposed to in the normal course of their business, according to the NHB.

Commenting on the proposed guidelines, Ravindra Sudhalkar, CEO of Reliance Home Finance told PTI news wire that, "Lowering leverage levels by HFCs is a good move that will help control the over speeding sector.  But regulators need to make easy availability of capital for HFCs with a strong balance sheet, as liquidity crunch is acting as a huge roadblock to the overall growth of the housing market".