PNB Housing Finance raises $100 million from IFC

PNB Housing Finance, the fourth-largest housing finance company by loan assets and second-largest by deposits, has raised $100 million from International Finance Corporation (IFC), a member of the World Bank group, to fund small- and medium-ticket home loans.

Non-banking financial companies (NBFCs) have been facing a liquidity crunch since late last year. But NBFCs such as PNB Housing Finance, which are backed by a strong parent, are finding it easier to raise funds compared with other stand-alone ones.

Despite the market conditions, the housing finance major raised the funds at a cost of 8.70%, 60-70 basis points cheaper from raising funds in the domestic market, for a period of five years.

This is the first disbursement under the Reserve Bank of India’s (RBI) automatic route in the revamped external commercial borrowings (ECB) framework in the current financial year, the company said.

PNB Housing Finance managing director Sanjaya Gupta said: “Several other ECB proposals are in the pipeline. The fully-hedged facility has come at a landed cost that is much lower than the domestic pricing for similar tenures. Raising of ECB under the present market environment and that too from a multilateral financial institution like the IFC demonstrates the strength of PNB HFL and the faith of the lending community in the sector.”

“The investment has been made under RBI’s automatic route for external commercial borrowings (ECB). The central bank has allowed PNB Housing Finance to borrow up to $750 million through ECBs,” the lender said in a statement.

IFC South Asia financial institutions group manager Hemalata Mahalingam said: “To support the Indian government’s vision of Housing for All by 2022, our country strategy places a strong emphasis on the affordable housing sector.”

The housing finance lender charges an interest rate between 9.05% and 12.50% at a floating interest basis.

Punjab National Bank