The PNB Housing Finance mortgage lender is intended to lay off around 5-7% of its employees to an apparent effort to streamline costs as the business is declining, joining an extensive number of firms which trimmed their workforce over the last six months.

On Wednesday, barely a month after Hardayal Prasad began taking as chief executive replacing interim head Neeraj Vyas, PNB Housing Finance’s decision was taken.

Two people familiar with the matter said that the organisation had asked 80–100 employees to leave.

The lender had 1,500 employees across India before the shedding started with Rs 4863 crore market cap and Rs 68,000 crore loans outstanding.

“We are reassigning resources to position PNB Housing in order to achieve steady growth. These initiatives require very tough choices, with a small range of workforce changes. Moreover, the quoted figures are misleading and exaggerated,” said the company replying to a query on this matter.

“We are looking forward as an organisation to enhance cost efficiency so that our business and our employees can maintain the competitiveness and growth. This requires a rigorous and careful process in our costs and expenditures decision-making,” it added.

Though its disbursement in the June quarter decreased by 91% to Rs 694 crore compared to Rs 7634 crore in the previous year as a result of the coronavirus pandemic, the degeneration of industry itself began last year due to capital constraints. Disbursements had dropped by half to Rs 18,626 crore in the FY20.

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LIC Housing Finance (LIC HFL) has reduced its interest rates with immediate impact for individual home loan borrowers, the firm said in a media release. For any amount of loan, the interest rate for new customers with CIBIL score of 800 or more is 7.5%. If the customer assigns new/existing single premium term insurance policy with the guaranteed amount equivalent to the loan amount to LIC HFL, an additional reduction of 10 bps i.e. 7.40% would be given.

Siddhartha Mohanty, the company’s Managing Director & CEO said, “We want to restore trust to the sector and will do our best to help the real estate industry and the economy.”

The interest rate is linked with creditworthiness, as reflected in the borrowers’ CIBIL scores.

The company had stated in February 2020 that they listed 14 projects to be referred to the Alternative Investment Fund (AIF), which was set up by the government to fund the last mile.

Life Insurance Corporation had recently made it clear that no plan was made to combine its subsidiary LIC Housing with any other company.

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Real estate developers body is looking for a 12-month deferral of housing loan instalments, a 2-year moratorium on project loans, issuance of building plans and other permits that are being supported by payment of fees, and other steps to help the real estate industry in UP and Haryana.

The National Real Estate Development Council (NAREDCO-UP) has written to Finance Minister Nirmala Sitharaman urging them to support the sector in this tough period.

“Because of the impact of Covid-19, housing sales are almost zero. There are no buyers in the sector; of course, the valuation of housing prices is zero. We have requested Finance Minister for some relief package,” said Supertech Chairman RK Arora, who also serves as Naredco-UP presidents.

To address the impact of the pandemic, NAREDCO said it is important that all project loans disbursed by the banks be given unconditional 2-year moratorium during which time, no project account should be considered as NPA and no recovery action should be taken against any developer. It has also asked for the removal of all NCLT/DRT cases against the developers.

To alleviate liquidity for retail home buyers who have taken home loans but require liquidity assistance owing to a pandemic condition, the body has demanded a 12-month deferment for EMI to pay home loan instalments. Penal interest can be permitted through this time of waiver of the additional interest.

CREDAI has stated that the industry is already facing a severe shortage of construction materials owing to import constraints and the closure of state borders leading to supply chain problems and strong rise in material prices. Because of the Covid-19 virus building sites is also locked-down.

For a year starting on February 15, the entity has sought an exemption from payment of interest on external development charges and internal development charges. It has also stated that the phase of the required approvals for the construction of a project must be conducted with urgency without the requirement of Bank Guarantee(s) and other charges.

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While the industry and policymakers evaluate the damage caused to the banking system by the Coronavirus attack, a ball-park possible based on the past forecast reveals that, in the worst-case scenario of macro-economic recession, bad loans may grow to 120 basis points with banks in the private sector experiencing high risk.

A stress test performed by the regulator previous to the outbreak of the epidemic found that total bad loans could increase to 10.5% of total loans in September 2020 from 9.3% in September last in the worst-case situation of ‘extreme stress’. In the case of ‘reasonable stress,’ it might grow to 10.2%, suggests prediction from the Financial Stability Report published in December.

“Banks ought to oversee retail housing loans, where EMIs need to be reworked,” said Madan Sabnavis, CARE Ratings chief economist. Small to medium-sized enterprises, airlines, hotels, tour operators, restaurants and retail outlets will be more impacted as demand hits zero. Auto consumer durables are seeing a revolt as demand declines. Construction and immovable properties would often follow a detrimental leap.

During periods of extreme stress, the prediction is that economic growth in fiscal 2020 slips to 2.9% and in fiscal 2021 to 3%. To be sure, the outcomes of stress testing might give a totally different image if performed with the near lockdown of companies due to the Coronavirus.

Under the severe stress scenario, the Financial Stability Report said public sector banking group’s gross NPA may rise from 12.7% to 13.5%, and private lenders may rise to 5.4% from 3.9%.

As things stand, the lock-down is being planned for the next 10 days and would certainly throw the economy out of gear. That has sparked questions regarding job losses and cuts in pay. It can dent in loan growth and contribute to higher default for the banking sector. But make no mistake; economists said the Covid-19 has already begun to make its effect known. Reaction from the central bank to the developments can hold the key.

“Inflation can spike as shortages in supply may occur. It would be fascinating to see how RBI changes the trade-off between growth and inflation,” said Partha Ray, Professor of Economics at the IIMC.

Standard and poor’s sliced India’s expected FY20 growth to 5.2% from 5.7%. Fitch Ratings said India might raise at 5% this fiscal. India’s GDP growth fell to 4.7% from the updated second-quarter forecast of 5.1% for the third quarter until December 2019.

The lenders across the spectrum have demanded that the regulator tide over the evolving situation for smoother NPA and provisioning laws, and probable lack in credit demand.

“Regulatory forbearance might not be a wise option because the experience of 2008 shows the other side of it. Yet we must keep in mind that the NPA level in 2008 was far below what it is now. If at all, RBI offers forbearance, it must be clearly understood with a sunset clause,” said Ray of the IIMC.

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As England’s high court and Wales provided the free pass to refinance the loan, Vijay Mallya would be able to retain his London family house, ensuring he pays over Rs 200 crore to Swiss bank UBS. On May 15, 2019, it had announced how Mallya had time until April 30, 2020, to pay the mortgage to UBS under a high court-approved consent term.

On May 15, 2019, it had reported how Mallya had time to pay the mortgage to UBS until April 30, 2020, under a consent term approved by the high court.

Just over a month before the 30 April deadline, on Friday, Justice Nigel Teare set aside Indian banks’ strong objection and allowed a company listed in the Bahamas to refinance it.

The huge townhouse overlooking Regent’s Park situated next to Madame Tussauds has more than a dozen bedrooms

and is inhabited by Mallya and his family members, that includes his wife Pinky, son Sidhartha and his mother.

The property held in the account of Rose Capital Ventures (owned by a Mallya family trust) was the subject of a court dispute with UBS demanding custody of a £20.4 million mortgage outstanding given in March 2012 against the non-payment. Justice Teare heard an appeal by Rose Capital Ventures on Friday afternoon to approve the refinancing for debt to be repaid to “prevent UBS from taking over the land”.

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On Thursday, the Enforcement Directorate (ED) said it has attached properties to the tune of Rs 66 crore of many persons implicated in a case involving Surya Vinayak Industries in a Rs 2,206 crore bank scam.

The ED, in a report, said that in the case of Surya Vinayak Industries Ltd. and its group companies under the Prevention of Money Laundering Act, the authority has attached properties to the tune of Rs 66.49 crore in the form of immovable or movable property belonging to different persons.

The linked properties consist of eight housing lands, one farmhouse, six residential flats, around 22 acres of farmland, four fixed deposits, preference and equity shares of limited companies.

The ED conducted its investigation against Sanjay Jain, Rajiv Jain, Surya Vinayak Industries Ltd and others on the basis of an FIR and charge sheet lodged by the Central Bureau of Investigation for fraud, cheating and causing unfair damage to public sector banks.

“In the process of the investigation, it was discovered that Sanjay Jain and Rajiv Jain, who were directors of Surya Vinayak Industries Ltd, had used fraudulently Rs 2,240 crore loans from different banks on the basis of fake documents, falsified books of accounts, bogus purchase invoices produced, accommodation entries etc.

“The accused routed the loan sums by bank accounts of various firms and institutions operated by them to an organization called Falcon Jersey Pvt. Ltd, which eventually used or parked in the form of immovable or movable properties in various locations such as Gurugram, Faridabad, New Delhi, Sonipat, Bhiwadi, Noida and Kolkata on behalf of different persons,” it alleged.

The ED said the accused persons allegedly obtained properties in this manner by revolving bank loans in a maze of transactions to hide the source. This is the first attachment by ED in the case.

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Indiabulls Housing Finance said on Sunday that Yes Bank owes Rs 662 crore as bonds to the firm and does not have any term loans pending from the lender. “We wish to notify that Yes Bank via additional Tier 1 (AT-1) bonds owe to Indiabulls Housing Finance Rs 662 crore,” the report said in a regulatory filing.

Being part of its treasury management for over Rs 20,000 crore of cash for the 2017 financial year, the AT-1 bond investments of Yes bank were rendered and the value of the bank reached USD 10 billion consequently.

“Indiabulls Housing Finance does not have any term loans from Yes Bank,” they added. The non-banking finance company said further that Sameer Gehlaut, the promoter of Indiabulls Housing Finance or any of its businesses or family members do not have any credit obtained from Yes Bank.

Indiabulls Housing claims that the loans to DHFL by the company had been sourd. This is the scenario since Yes Bank co-founder and former CEO Rana Kapoor was arrested on alleged money laundering charges.

Yes Bank is subject to a moratorium until April 3 and is not permitted for customers to withdraw more than Rs 50,000 until this time, as well as the Board, has been replaced by the RBI, with a former SBI executive Prashant Kumar.

The RBI lays down the Yes Bank’s restructuring plan with SBI receiving 49 per cent of equity from the bankrupt lender of the private sector by investing Rs 2,450 crore.

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Morgan Stanley has purchased an equity stake in Ummeed Housing Finance in the funding round of the company’s Rs 164-crore series-D. Ummeed Housing is operated by Swiss investor LGT, which has purchased the Soros Economic Development Fund’s India-focused fund Aspada.        

A fund operated by global investor Morgan Stanley Private Equity Asia, which owns a minority stake in the company, has led the new funding round. Investment bank Avendus Capital has worked on the deal as the financial adviser to the firm. The round also included current investor LGT Lightstone Aspada. This round of funding comes on the back of the $10-million equity raised in September 2018.

In 2016, Ummeed Housing developed a shop with an emphasis on the informal and low-income markets, mainly in Tier-2 and -3 cities. The organization is a new-age lender that has developed a completely digitized loan acceptance and disbursement process that allows borrower inquiries to be quickly turned around.

It provides secured business loans to the MSME market, in addition to home loans. “By the next financial year, this fundraising gives us clear visibility on the equity front. We will use these proceeds to extend further into new geographies and continue to strengthen our technology platform, focusing on developing state-of-the-art underwriting practices,” said Ashutosh Sharma, founder and MD, Ummeed Housing Finance. He added that the company is targeting doubling its assets in 12-18 months to Rs 1,000 crore.

“For most of this financial year, India’s housing finance market has seen a liquidity crunch, with stress in a couple of large housing finance firms. Fundraising in the current environment from a reputable private equity investor indicates the confidence the fund has shown in the company’s growth narrative and strong business model,” he said.

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More than two years after a bailout scheme for stalled slum rehabilitation projects was initiated by the state government by providing soft loans, not a single builder has benefited from it.

In October 2017, the government had partnered with the SBI the state-run Shivshahi Punarvasan Prakalp Limited (SPPL), to provide loans between Rs.5 crore – Rs.25 crore to developers whose projects were ineffective due to the lack of funding. The priorities were mid-sized constructors with one or two projects.

In accordance with the terms of the agreement, SBI would charge developers 9.5% interest in the development of saleable components and 8.75% interest on rehabilitation components. SRA schemes work on a cross-subsidy model and an index of incentives for the floor space – developers build homes for sale and rehouse free of charge for slum-dwellers and subsidize the costs of rehab slum-dwellers for free sale.

Moreover, 60% of the saleable components had to be set aside for affordable housing. Many developers have said that this reservation would be a down-turn for them. Over 250 slum rehabilitation projects have stalled in various stages in the city. It is said that the financial crisis is the main cause.

Officials have reported that 15 developers applied for loans under the scheme, with only four approved. Several builders blamed the denial of their applications because of the “stringent terms”.

The officials of the SBI stated that three of the four applications are in the final stages of the loan disbursement process. A spokesperson from the bank explained that it is a process of several considerations to authorize a financial project such as regulatory approvals and financial closure. The bank reported in a statement that the program is still viable.

Officials of the SPPL recommended extending the scheme to all public sector banks.

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Indiabulls Housing Finance has placed a top two-storey bungalow property on the block to recover its dues from owner Phulchand Exports in South Mumbai’s plush Cuffe Parade area. The bungalow’s reserve price is laid at Rs 121 crore, with 12,100 sq ft build-up area, and the company dues and loan guarantors are approximately Rs 100 crore.

On October 9, the bungalow will be auctioned. The property was mortgaged by Phulchand Exports Pvt Ltd, which owes a total of Rs 104 crore to the non-banking finance company. Apart from end-users, real estate developers may also display a keen interest in the estate if there is a growth opportunity for the bungalow, said, property experts.

The bungalow is a construction composed of ground, first floor and part of the second floor, along with open land spaces on all four sides. The building is located in the Cuffe Parade area on a location near Mittal Grandeur, at the intersection of Khatau Road.

It is expected that bidders should deposit Rs 12.10 crore as the earnest deposit money, which is 10% of the reserve cost. The effective bidder is then expected to pay a deposit of 25% of the sale price (less 10% amount paid along with the bid) when the bid is accepted. The remaining 75% of the selling cost must be deposited within 15 days of the bid’s acceptance date.

The NBFC released an e-auction notice for immovable property under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Indiabulls Housing Finance has taken possession of the estate and will be sold on the grounds of “as is where is,” “as is what is,” “whatever there is” and “without any recourse” basis.

It may be recalled that Indiabulls Housing Finance recently auctioned the super-luxury residential tower Palais Royale in the Worli location of Mumbai to recover some of its dues from the developer Shree Ram Urban Infrastructure.

The total loan to Phulchand Exports amounts to Rs 104.38 crore, by the manner of outstanding principal arrears including accrued late fees and interest until August 26 along with relevant future interest in terms of the loan agreement.

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