Housing Finance Companies Research Articles

Impact of Corporate Social Responsibility on Financial Performance of Selected Housing Finance Companies in India

Impact of Corporate Social Responsibility on Financial Performance of Selected Housing Finance Companies in India

Housing finance by banks and housing finance companies in India: A review

Housing is a major pre-requisite of human life. So, housing development and housing finance are the governmental priorities worldwide, and Government of India (GOI) is no exception. In India ‘Affordable Housing for All’ has been a national goal since 2017. Though this national goal was supposed to be attained by 2022, it could not be attained, partly because of the crisis due to the global pandemic, Covid-19. The revised target of the GOI is 2025. This paper looks into the major players in the housing finance market viz. Commercial Banks (CBs) and HFCs and their role in attaining the national housing goal. Better presence of specialized agencies that have only minor role now, like Affordable Housing Finance Companies (AHFCs), Small Finance Banks (SFBs), and Apex Co-operative Housing Federations (ACHFs) also discussed.

Strategic Financial Management for Housing Finance Companies in India: A Multivariate Approach

Housing Finance Companies (HFCs) have traditionally played a significant role in India's formal housing finance sector. However, their prominence has waned since the fiscal year 2003 when Commercial Banks (CBs) surpassed them in market share, holding over 70 percent of the market compared to HFCs' 28 percent. Cooperative sector institutions occupy a much smaller share, approximately 0.5 percent. Despite their specialization in housing finance, HFCs face increasing challenges to their market share and profitability, particularly the smaller ones. Many smaller HFCs have already succumbed to competitive pressures. The introduction of the 'Base Rate' by the Reserve Bank of India compelled commercial banks to charge higher lending rates to HFCs, placing additional cost pressures on these institutions. Given this evolving landscape, the financial performance of HFCs has become crucial for their survival and growth. In this context, this paper aims to achieve the following objectives: (i) provide an overview of the institutional housing finance system in India, (ii) conduct a comprehensive examination of the role of HFCs in the changing housing finance market, including their principal challenges, (iii) analyze the determinants of superior financial performance in HFCs using Multivariate Discriminant Analysis (MDA) methodology, and (iv) propose effective strategies to enhance the financial performance of HFCs in the context of financial management.

Do Ownership Groups Affect Profitability of Housing Finance Companies? An Analysis of the Indian Market

Do Ownership Groups Affect Profitability of Housing Finance Companies? An Analysis of the Indian Market

Factor Influencing Customer Choice While Selecting Bank and Housing Finance Companies for Home Loan

Factor Influencing Customer Choice While Selecting Bank and Housing Finance Companies for Home Loan

Determinants of Profitability in Indian Housing Finance Companies: An Empirical Analysis

Housing Finance Companies (HFCs) are essential non-banking financial institutions (NBFIs) in emerging economies where housing remains an active area of development. To ensure that low-cost and hassle-free housing finance is accessible to customers, it is crucial that HFCs function profitably. While previous studies have studied determinants of risk in financial intermediaries that provide housing finance, this is the first study which focuses on the issue of profitability in the case of HFCs. Specifically, this empirical study identifies determinants of profitability in the case of Indian Housing Finance Companies (HFCs) using the panel data regression method. The study employs a panel dataset of 57 Indian HFCs for the period 2011-2019. The profitability of HFCs is measured using the Return on Assets ratio. The results present three interesting findings. First, HFCs with a larger size exhibit higher profitability, suggesting that smaller HFCs face diseconomies of scale and scope. Second, an increase in interest expenses and compensation to employees is associated with reduced HFC profitability. Lastly, ownership characteristics of the HFC are key determinants of profitability. Specifically, we find that being a subsidiary of a commercial bank increases HFC’s profitability. Contrarily, being government-owned and being affiliated to a large business group is negatively associated with HFC profitability.

FINANCIAL PERFORMANCE OF HOUSING FINANCE COMPANIES IN INDIA

Housing not only provides physical shelter but also has significant impact on the lives of the dwellers in terms of skills enhancement, income generation, increased security, health, self- confidence and human dignity. Housing finance development, therefore, plays a role in boosting equitable economic growth and reducing poverty through helping households build assets, improving living conditions, empowering the middle- and lower-income population, and strengthening communities. The House Building Finance Corporation (HBFC), which has traditionally dominated the housing finance sector, is now a declining player, in part because of decreasing government support, and in part because of its history of operational ineffectiveness. In its place, domestic and international commercial banks and a few new specialised institutions have entered the market, and have a significant potential for growth. This paper has examined the financial operations of Housing Finance Company in India from the year 2018 to 2022. Some selected parameters like liquidity, solvency, valuation and profitability ratios has been used for analysing the financial viability of some selected housing finance Companies listed in recognized stock exchanges for the period from 2018 to 2022. Keeping the focus on above points in mind, the researcher has made an effort to study the financial performance of selected housing finance companies and offer suggestions for the improvement of efficiency in the selected Housing Finance Companies.

An Analysis of Profitability and Key Hurdles for the Housing Finance Sector in India

There is a fear of recession worldwide as is evident from the decline in the economic activities in all major economies of the world. As per the prediction of the IMF, the Indian economy looks somewhat better placed compared to other major economies for the current financial year. The real estate sector has always been a significant contributor to the process of growth of India and depends on the soundness of the Housing Finance sector to a great extent. The study tries to examine the profitability of the housing finance sector as well as identifies significant hurdles, especially in the post Covid period when the fear of global recession looms large. Three leading housing finance companies based on market capitalization are taken as the sample companies and one-way Anova is used as a significant tool of analysis. The study points that the favourable time ahead for housing finance sector in near future.

Exploring the financial performance of a few housing finance companies

This paper investigates the financial performance of a few Indian housing finance companies. Several variables, such as capital utilization, cost, revenue, and profit margin, all have an impact on an organization's financial performance. This investigation has broken down the financial performance of HFCs for the top six HFCs in India over an eight years period. This report examines the growth of profitability and financial adequacy of HFCs, as well as their financial performance in terms of operating profit, net profit, return on capital employed, and return on assets. In this analysis, the F test is used in two ways to analyze the financial information of HFCs.

The intertwined relationship of shadow banking and commercial banks’ deposit growth: evidence from India

PurposeWhile traditionally it was believed that shadow banking undercuts business from traditional commercial banks, the time has now arrived to examine the various innovative practices used by various shadow banks and non-banking finance companies (NBFCs) to explore various collaboration and competition possibilities. The parallel existence of the traditional and shadow banking systems creates a market environment where both the entities are inter-dependent for growth and development with their edge of advantages and snags. This study aims to investigate the development and growth of deposits in NBFCs and scheduled commercial banks (SCBs) and, through the adoption of innovative practices, highlights possible growth opportunities for both ahead.Design/methodology/approachThis study uses yearly bank deposit data from 1998 to 2019. This study incorporates univariate autoregressive integrated moving average modeling to predict the future deposit growth of SCBs and NBFCs in India.FindingsThis study concludes that both the entities, i.e. NBFCs and SCBs, will experience deposit growth; however, the proportionate growth of deposits in SCBs will be higher than NBFCs.Research limitations/implicationsThis study concludes that the NBFCs will exhibit higher growth in the future. Thus, a strengthened regulatory framework will boost the growth of the NBFCs, providing a safe environment to the investor. Further, as this study primarily considers only deposit-taking NBFCs and commercial banks and a single variable – “deposit” to predict its future growth, it offers a scope for future research to consider and include other kinds of NBFCs like non-deposit taking NBFCs, housing finance companies, micro-finance Institutions and infrastructure finance companies.Originality/valueA competently regulated financial system of an emerging economy confers tremendous growth opportunities to the financial institutions functioning in the system. Deposits are a significant parameter for the performance of the financial institution; thus, by keeping it as the underlying premise, this study forecasts the future growth in deposits for both the commercial banks and NBFCs. This forecasted growth in deposits for both entities, if analyzed and acted upon appropriately, can, apart from other opportunities for investment, be used to point at directional growth of the economy and the gross domestic product, considering that credit growth is a barometer for economic growth. The scope of this study is limited to NBFCs and SCBs of India and considers only a single variable, i.e. deposit for data analysis and growth forecasting.

Enterprise Risk Management and Firm Performance: A Financial Sector Analysis of Pakistan

Enterprise faces many kinds of risks and therefore the attention differs across institutions and organizations. Risk as an event that will influence the performance of a corporation as well as environmental risks, moral problems and social problems. Furthermore, risk or uncertainty as a broad and well-organized structure for managing different kinds of risks like credit, operational, marketplace, operative, economical or capital risks and risk transmission to maximize organization worth. The research analysis the different performance indicator of firm, enterprise risk management and their effect on firm performance. The secondary data on Commercial Banks, Foreign Banks, Investment Banks, Insurance Companies, Development Finance Institutions (DFIs), Leasing Companies, Mutual Funds, Modaraba Companies and Housing Finance Companies are collected from Financial Statement Analysis (FSA) from 2008 to 2016 provided by Statistics and DWH Department of State Bank, Pakistan. This study used Debt to Asset Ratio (DTA) as dependent variable and dummy of firm performance while Cost to Income Ratio (CTI), Enterprise Risk Management (ERM), Equity to Asset Ratio (ETA), Enterprise Value to Asset Value (EVTAV), Leverage (LVG), Return on Capital Employed (ROCE) and Return on Equity (ROE) are used as independent variables. The research found long run relationship among the variables. OLS Regression Test that Enterprise Risk Management (ERM) implementation, Equity to Asset Ratio (ETA), Enterprise Value to Asset Value (EVTAV), Leverage (LVG), Return on Capital Employed (ROCE), Return on Equity (ROE) have significant effect on performance of financial firms in positive direction while Cost to Income Ratio (CTI) have insignificant impact on performance of financial firms.

Predicting Solvency of Non-Banking Financial Institutions in Bangladesh by Using Springate Fulmer Model

Prediction of financial distress is a significant issue for any company. At present Non-Banking Financial Institutions (NBFIs) represent one of the most important parts of a financial system in Bangladesh. NBFIs contribute a lot to the GDP growth of Bangladesh. So, it has become very essential for the companies to predict the insolvency in advance for taking their important decisions for the betterment. The purpose of this paper is to predict the solvency and the factors that have an impact on the solvency by analyzing the financial statements for a period of 5 years(2013 to 2017) of 20 Dhaka Stock Exchange (DSE) listed Non-Banking Financial Institutions (NBFIs) including asset finance or leasing companies, investment finance companies and housing finance companies of Bangladesh by using Fulmer H score model and Springate Z score model. The findings indicate that according to Fulmer Model few sample NBFIs are in risky zone and according to Springate model all the sample NBFIs are in distress zone. The study suggests that according to the context of Bangladesh Fulmer H Score model is more appropriate compared to Springate Z Score model for predicting solvency.

The Impact of Shadow Banks on the Commercial Bank Lending in India with Reference to the Housing Finance Sector.

Significant variations of bank profitability in Indian commercial banks during the period 2009-2018 motivated the critical need to study the impact of shadow banking on the profitability of commercial banks in India. Shadow banking is defined as any institution that offer bank like activities but not regulated as banks. These institutions seem to be on the rise in India thus this research considered to investigate their implications to traditional banks’ profitability. The secondary data in this analysis covered a period of 10years from 2009 to 2018. The multiple linear panel regression model for the bank profitability measures; Return on Asset (ROA), was used as a dependent variable to analyze the data. Shadow banking ratios, variables were used as independent variables in the model. To measure if the loans given by banks to housing sector decreased as a result of housing finance companies, the net aggregate of loans disbursed by banks to housing sector and net aggregate of loans disbursed by housing finance companies were recorded for the past 5 years and significant analysis was made accordingly looking at the data .Shadow banking ratios were derived from monetary aggregates data that is M3, total bank loans and total bank deposits. Regression results indicated thatShadow banking only completes the banking system and has no significant impact on loans of the commercial banks in the Housing Finance sector.

Impact of RERA on Home Loan Borrowers in India

The Real Estate Regulatory Authority Act (RERA) is a landmark event in the real estate sector in India. The Act aims to provide confidence to the buyer of a real estate property. How RERA benefits homebuyers in general and home loan borrowers in specific, is the aim of this article. RERA also helps the other stakeholders in the real estate market like banks, housing finance companies, etc. Various functions and the salient features of the RERA have been explained. Though the RERA is at the initial stage, it definitely will affect and regulate the real estate market over a period of time. Real estate sectors play an important role in delivering one of the basic needs of human beings. The sector has grown significantly in the recent past. Before implementation of RERA, the sector was largely unregulated and professionalism was lacking. RERA mainly aims to protect the interest of homebuyers and enhance transparency in the real estate sector.

Financial Soundness of Housing Finance Companies: Application of Altman Z- Score Model

Housing financing industry is the essentially industry most of the housing financing companies contributing greatly to the development of our economy and have. Recently, some of the housing financing companies have started losing profits continuously and are on the verge of bankruptcy. The purpose of this paper is to study the financial position of housing companies by applying the famous Altman Z score model to verify whether these companies really suffered financially during the period from 2015 to 2019,16 housing companies are considered for the analysis of the study. It was found that not all the housing finance companies were performing as expected.

Crisis in the Indian Non-Banking Finance Companies (NBFC) Sector

Managing one-fifth of credit in the country, the Non-Banking Finance Company (NBFC) is a vital sector for the Indian economy. A series of problems are hurting the Indian NBFC sector since the default of infrastructure finance major IL&FS in September 2018. What seemed to be a liquidity crisis is looming into a solvency issue. Some major players backed by reputed promoters are going out of business. Though the downgrades & defaults do have a considerable impact on the banking and finance industry as a whole, there is sufficient panic-triggering turbulence in certain pockets of the industry. The Housing Finance Companies (HFCs) and the Asset Management Industry are found to be vulnerable and got highly hurt by the crisis. A central issue that led to the liquidity issues in the industry is the asset-liability mismatch. Regulators prefer tweaking macro-economic variables to curtail the problem rather than providing a special liquidity window. The crisis highlighted the need for much closer interaction and the interplay between regulators such as RBI, IRDA, NHB, and SEBI to avert such possibilities in future failing which bubbles like these could culminate to become a systemic risk. Findings from this paper can help various stakeholders from the NBFC, the regulators, and the Government in better preparedness.

Affordable housing finance companies in India: how do they ‘differently’ serve the underserved?

Over the years, the importance of access to affordable finance has inevitably been recognized as a critical component of developing the third world. Against the backdrop of huge under-penetration of the housing finance sector in India, this study reflects on the functioning of Affordable Housing Finance Companies (AHFCs), which are among the important stakeholders providing affordable housing loans to the low-income segment households. However, the process through which these new entrants have been able to down-market housing finance remains a black box till date. In light of this research gap, this study proposes a conceptual model that succinctly captures the business process of AHFCs across three main dimensions: Outreach Approach, Lending and Underwriting Practices and Risk Management Interventions. This model reflects on the kaleidoscope of process innovations that the AHFCs have embraced to cater to the housing finance needs of the low-income customers, while achieving profitability and social impact.

A Comparative Study between Public and Private Housing Finance Companies (HFCs) in India

A Comparative Study between Public and Private Housing Finance Companies (HFCs) in India

A Study on the Role of National Housing Bank (NHB) in Housing Finance

Housing is essential for decent living of a man. Providing housing for all is the prime motive of the Government of India. With a view to fulfill this objective, it instituted National Housing Bank during the year 1988 through which various housing finance companies are providing housing finances. The study is attempted to highlight the role played by the NHB in housing development of our Nation. NHB played a major role through its refinance activity to the housing finance institutions which are involving in housing finance activities.

A Comparative Study between Public and Private Housing Finance Companies (HFCs) in India

A Comparative Study between Public and Private Housing Finance Companies (HFCs) in India