Sebi Gives MFs More Room to Park in Housing Bonds
Mumbai: Asset managers, which manage debt funds running in thousands of crores will now have more room to invest in corporate bonds, sold by housing finance companies (HFCs) as the capital market regulator Sebi has increased their additional permissible investment limit.
The move has two-pronged benefits: While it aids Prime Minister Narendra Modi’s promise of “Housing for All” by 2022; this should help deepen the market for such debt securities. “In light of the role of HFCs especially in affordable housing and to further the Government’s goal under Pradhan Mantri Aawas Yojana (PMAY), it has now been decided to increase additional exposure limits provided for HFCs in financial services sector from10% to15%, Sebi said.
Now, regulatory guidelines debar sectoral exposure in debt oriented mutual fund schemes with a cap of 25% at the sector level. An additional exposure not exceeding 10%, over and above the limit is allowed in financial services sector only to HFCs. “The 50% enhancement in investment limits of MFs for HFCs will ensure meaningfully increased flow of capital for HFCs,” said Gagan Banga, vice-chairman, Indiabulls Housing Finance. “It will strengthen our ability to grow our home loans portfolio faster while offering the best possible rates to borrowers.”
With an expected higher demand, these borrowers may have to pay interest rates, less than the usual, and in turn may pass on the benefit to home loan borrowers.