National Housing Bank likely to double affordable housing outlay for HFCs this fiscal
LIC Housing Finance, Bajaj Housing Finance, PNB Housing Finance, Aadhar Housing Finance and TruHome Finance are among the companies that could benefit, they said.
HFCs had earlier approached NHB and the finance ministry, seeking more funding as they look to diversify their borrowing and reduce their reliance on banks.
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Raising fresh bank loans can become difficult when a bank reaches its internal exposure limit for lending to NBFCs and HFCs, the officials explained.
“Banks have limits on their exposure to HFCs, so raising fresh funds can become difficult even when demand for home loans is strong,” said a senior official with a mortgage lender. “We have been asking NHB for a larger allocation because its refinance is cheaper and would give us room to grow without relying so heavily on bank borrowing.”
Officials put the rate on regular NHB refinance at about 7.65% and on affordable housing funds at about 4.25%. Both are cheaper than comparable bank funding.
NHB could meet 30-35% of the borrowing raised by some HFCs this year, compared with 20-25% last year, one official estimated.
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The state-owned development financial institution (DFI) had disbursed ₹32,308 crore in refinance in the one-year period ended June 2025, compared with ₹32,085 crore in the preceding year. Affordable housing fund disbursements, which are included in the overall figure, stood at ₹5,791 crore.
Banks, however, remain HFCs’ largest source of funds, with their share rising while those of mutual funds and insurers fell.
HFCs had gross payables of ₹7.35 lakh crore to the financial system and gross receivables of ₹0.19 lakh crore in March 2026, according to the RBI’s June Financial Stability Report.
HFCs held ₹7.44 lakh crore in outstanding individual housing loans at the end of July 2026, or 18.6% of the ₹40.07 lakh-crore home loan market reported by HFCs, public and private banks, and regional rural banks, NHB data showed. Their share was 18.3% a year earlier.
A larger NHB funding pool could help them expand their loan books while drawing less heavily on banks for new funds.
NHB provides refinance against eligible housing loans originated by lenders, giving them access to longer-tenor funds. The institution carries a AAA credit rating and has worked with development finance agencies on affordable and green housing programmes.
Officials said targeted funding for segments such as green housing and homes in underserved regions can be around 30 basis points cheaper than regular NHB refinance.
