HFC companies and NBFCs gained in trade today after the Reserve Bank of India took steps to ease liquidity concerns for these firms.
On Thursday, RBI in a notification said that the minimum holding for NBFCs originating loans will be now pegged at six-monthly or 2-quarterly installments as against the earlier 12 month period. The new rules remain valid for loans with maturity term of over 5 years. The move will be of help to HFCs with loan portfolio of a longer life-span.
Also, the holding amount has been increased from 10% to 20% of the portfolio. In addition, the minimum retention requirement for such securitisation/assignment transactions is decided at 20% of the book value of the loans being securitized or 20% of the cash flows from the assets assigned.
And the relaxation on the holding period front will make more of loans eligible for securitization.
The proposed relaxation will remain valid for a period of six months from the date of release of the circular.
Some of the companies in the sector including Repco Home and DHFL by as much as 11%.