“This is important in view of the increasing share of corporate loan book in PNBHFL’s total loan portfolio and the consequent vulnerability arising out of weakness in real estate sector. Also, the impact of the stake sale announced by Punjab National Bank (PNB; promoter of PNBHFL) in PNBHFL is to be seen,” CARE Rating said in a statement.
The ratings agency, however, said it would continue to monitor the developments and would take up the review of the rating as and when there is further clarity on the situation.
"Overall, Housing Finance Companies (HFCs) with focus on retail housing finance are expected to maintain adequate profitability on the back of healthy business growth and low credit costs. Weakness, however, in credit profile of builder / corporate loans of HFCs, rising competition and the resultant possible dilution in credit underwriting norms, and long-term funding are the key challenges for the sector," the agency said.