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Posted at: Jun 15, 2019, 9:29 AM; last updated: Jun 15, 2019, 9:29 AM (IST)

HFCs asked to appoint chief risk officer

More regulatory instructions in the pipeline in order to streamline the market, following last year’s default by the ILFS management

In a bid to boost market sentiment National Housing Bank (NHB) has directed bigger housing finance  companies with assests size more than Rs 5000 crore to  appoint a  chief risk officer (CRO) with clearly specified role and responsibilities. The circular will cover top 15 HFCs controlling 95 per cent of the business. 

The move follows a similar direction given by the  Reserve Bank of India a few days ago to appoint a CRO in a non-banking financial company (NBFC) with asset size more than Rs 5,000 crore.

There are  around 100 housing finance companies (HFCs) operating in India currently. Within the past two to three years, close to 15-20 companies have come up with a focus on lending to the informal sector, where borrowers typically don’t possess the requisite documents to avail of loans from banks or bigger financial institutions.

Recently, liquidity-starved DHFL had said it won’t allow premature withdrawals of its deposits in order to reorganise its liability management.

There are more regulatory instructions in the pipeline in a bid to give comfort to the market, lenders, analysts and in­vestors, following last year’s default by the Infrastructure Leasing & Financial Services, which led to the reporting of a series of defaults by other players in the NBFC and HFC space, dampening market sentiment.                       — S C Dhall

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