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Kolkata: Credit rating firm ICRA has forecast 17-19 per cent growth in housing credit in the current fiscal year, i.e. FY2019. In the previous FY, housing credit witnessed a 16 per cent growth.

The growth of 17-19 per cent has been forecast despite the gross non-performing assets of housing finance companies (HFC) marginally going up to 1.1 per cent as on this 31 March against 0.8 per cent last year. ICRA attributed the slight rise in NPA to demonetisation and introduction of GST that affected the repaying capacity of the borrowers.

In its latest report released on Wednesday, ICRA said that the forecast is mainly based on the growing affordability for the first-time home buyer which has got a boost by the recently implemented incentives and thrust in old schemes like the Pradhan Mantri Awas Yojana.

ICRA has found out in its estimates that the mortgage penetration (housing credit as a percentage of GDP) touched the double-digit mark of 10 per cent as on 31 March compared to 9.5 per cent last year. ICRA expects mortgage penetration levels to go up by another 300-500 basis points over the next five years.

Newer HFCs in affordable housing segment continued to grow at higher than the overall industry growth rate of 39 per cent, the report says. Retail home loan asset quality of HFCs is likely to be benefitted by the recent ordinance passed by the Union Cabinet to treat home buyers as financial creditors.

“HFCs would need to tie-up the incremental funding requirements of around Rs 4-lakh crore to meet the growth plans as well as replacing the maturing liabilities in FY2019,” said Supreeta Nijjar, a vice president at ICRA.

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