India’s largest mortgage financier may remain a shadow lender, despite a central bank proposal for large non-banking finance firms to become full-fledged banks.
“In terms of remaining a large non-banking finance company, that option is very very much on the table,” Housing Development Finance Corp. Vice Chairman and Chief Executive Officer Keki Mistry, said in an interview with Bloomberg TV on Thursday. “We will obviously have to look at the regulations and then take a call. We are very comfortable, we stand the way we are and we believe we would.”
In November, a Reserve Bank of India panel recommended that large shadow lenders may be considered for conversion into banks after 10 years of operations, as authorities continue to nurse the sector that’s going through a prolonged cash crunch.
In recent years, shadow lenders have become a key source of last-mile credit for consumers who typically don’t qualify to borrow from traditional banks. However, a prolonged credit market seizure that started in 2018 with the collapse of an infrastructure financier and ensuing soured debt concerns hasn’t abated so far.
The RBI is expected to publish its final regulations on the conversion of shadow banks in the next few weeks after collecting feedback on the draft rules.
Mistry said he was confident that bounce back in demand for home loans would continue, following the strong revival seen in the last four months.
“People have taken the pandemic in their stride,” he said. “Business is back to normal, growth is back to normal. From September onwards, growth has picked up.”
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