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Housing Finance – Collection Efficiency At 85-90%: MOSL



While disbursements in the housing finance sector are at 60–70% of YoY levels, they are expected to reach 85–100% of prior-year levels in 2HFY21, a recent report by Motilal Oswal Financial Services Limited (MOFSL) stated.

This was the basis of an analysis done by MOFSL on the NBFC sector at large. The sector has witnessed a meaningful number of equity capital raises in the past two months. Most companies have raised money largely in order to reduce leverage rather than as ‘repair capital’. 

Overall collection efficiency was at 85–90% for affordable housing across financiers in Aug 2020. Given that no large-scale lay-offs or pay-cuts have been implemented by companies, the situation is manageable. 

In south India, construction activity is almost back at pre-COVID levels, while in north India, it is at 80% of earlier levels. Recovery in construction activity in Mumbai, India’s largest market has been at just 50–60% levels as the fear of the pandemic is high in migrant labor. Likewise, sales have picked up to 50% of pre-COVID levels v/s ~30% earlier. This is driven by Affordable and Mass Housing, while the Luxury segment remains a concern. 

The recent cut in stamp duty in Maharashtra would aid marginally. Other states could also follow suit. 15–25% of retail customers have availed moratorium; however, most of them have done so largely to conserve cash. The availment of the moratorium on account of job loss or pay cuts is not meaningful. One company mentioned that the maximum stress from the retail moratorium book would be 10–15%.


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