NHB Instructs HFCs to Report Bad Loan Data on the First Day of Every Month.

MUMBAI: The National Housing Bank (NHB) has directed the heads of all Housing Finance Companies (HFCs) to submit bad loan data by the first day of every month, according to sources familiar with the matter.

This move comes after NHB observed that HFCs were continuing to collect loan payments for the previous month even up to a week after the month had ended.

The delayed collections appeared to be an attempt to maintain favorable bad loan ratios and avoid negative reporting to the regulator.

Typically, HFCs have been submitting key financial data to the NHB by the 10th or 12th of each month, a timeline the NHB has expressed dissatisfaction with.

In a letter dated December 2, 2024, addressed to managing directors of all HFCs, the NHB explicitly raised concerns over the non-compliance with submission deadlines for delinquent loan data. The Economic Times has reviewed a copy of the letter.

“As part of its supervisory responsibilities, NHB collects data from HFCs on a regular basis,” the letter stated. “In this context, you were instructed to submit delinquency data by 01-12-2024, 10:00 am.”

The NHB’s communication emphasized that despite multiple reminders, some HFCs had been negligent in meeting the submission timelines.

“Despite repeated follow-ups and reminders, it has been observed that your company failed to submit the required data,” the letter noted. “You are required to provide an explanation for this delay and are once again directed to submit the data immediately.”

Mortgage industry officials told ET that in a recent meeting between NHB representatives and HFC managing directors, the regulator expressed concern over delays in reporting bad loan data. These delays, NHB suspects, may be an attempt to obscure the actual delinquency levels within companies.

According to insiders, the NHB’s push for timely reporting gained momentum after its annual inspection revealed discrepancies in the data provided by HFCs.

“The regulatory framework has become significantly stricter in recent months,” said a mortgage lender on condition of anonymity. “However, we hope the NHB and RBI understand that the segment we serve often requires a grace period to repay loans.

Categorizing borrowers as delinquent or stressed due to a slight delay in installments could be reconsidered, allowing a few more grace days before finalizing the month’s accounts.”

Under the automated data flow system, HFCs are mandated to submit comprehensive data on total assets under management, disbursed loans, collections, and delinquencies, among other metrics.

This centralized data repository ensures seamless submission of returns to the Reserve Bank of India and promotes full automation of the reporting process.