Glossarytaught in M5.02
Housing finance company
Also called HFC, housing finance.
A specialised lender whose book is mortgages, regulated within the non-bank framework in India.
Its asset side is among the safest in lending: secured against property, long-tenor, with historically low loss rates when underwriting is strict.
On the liability side it carries the same mismatch as any non-bank. Twenty-year assets funded with three-year borrowings works until the borrowing has to be rolled in a market that has stopped lending.
Two variables separate the good books from the bad. One is how tightly the lender holds loan-to-value, and the other is the share of self-employed borrowers.