MUMBAI:
HDFC chairman
Deepak Parekh has said that there is evidence of a slowdown in the economy, which is reflected in a lower GDP growth of 6.8% of FY19. He also said that there was risk aversion in the system with non-bank finance companies (NBFCs) not getting funds to lend.
In his speech to shareholders at the annual general meeting on Friday, the chairman of the country’s largest housing finance company said that there has been an across-the-board slowdown in consumption. “Given the inherent demand and low penetration levels, I do believe this is temporary in nature,” said Parekh.
“The challenge today is risk-averseness. Banks are reluctant to lend and there has been a flight to safety where a select, few, high rated NBFCs and housing finance companies have access to funding, while several others’ access to credit has been choked. As a result, a number of NBFCs have curtailed disbursements and this, in turn, has spillover effects into other sectors,” said Parekh. “To my mind, what is critical is re-instilling confidence in lenders to support growth in the economy.”
Later, responding to shareholder’s queries, Parekh said that there is no liquidity problem as the RBI and the government have taken enough steps to ensure cash supply in the system. The situation should improve over time,” said Parekh.
HDFC, as a prudential measure, is sitting on additional cash. As against Rs 6,000-7,000 crore, the corporation is holding liquid cash of Rs 17,000 crore.
Responding to another shareholder query on royalty payments from subsidiaries for use of brand name, Parekh said, “We should have started this earlier but it is too late now. The subsidiaries have been around for 20 years,” said Parekh.
Parekh told shareholders that the corporation had a Rs 400-crore exposure to Jet Airways which was fully secured by three floors of a building in Bandra-Kurla Complex. He said that the corporation has taken possession of one floor. However, banks have initiated insolvency proceedings against the airline in the National Company Law Tribunal and have objected to HDFC taking charge of the security.
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