Bajaj Housing Finance seeks more time to list on bourses, Real Estate News, ET RealEstate

August 28, 2023

MUMBAI: Bajaj Housing Finance, the home finance subsidiary of Bajaj Finance, has sought more time from the Reserve Bank of India (RBI) to list on the local stock market, arguing that the October 2025 deadline is too soon for a housing finance company (HFC) that is just five-and-a-half years old.

The request was made during a meeting on Friday of top NBFC executives with RBI governor Shaktikanta Das, deputy governors M Rajeshwar Rao and Swaminathan J, among others, multiple people familiar with the matter said.

“Bajaj Housing has asked for more time. Their logic is there should be at least a 10-year track record for a company to list and they are only five-and-a-half years old. They also said they make all relevant disclosures with the holding company results, so what is the hurry in listing,” one of the people cited above said.

However, the regulator does not seem to be inclined in granting more time, another person familiar with the discussions said.

“RBI officials said that the regulation is clear. All companies mentioned in the upper layer (UL) of NBFCs have to list within three years. They don’t seem to be inclined for any relaxation. The message is unlisted NBFC-ULs have to list,” said a second person aware of the discussions.

Emails sent on Saturday to spokespersons of Bajaj Finance and RBI did not elicit any response till press time Sunday.

Bajaj Housing is among 16 NBFCs and housing finance companies (HFCs) classified in the so-called upper layer of the RBI, a list that was released on September 30, 2022. This list was based on the RBI’s scale-based regulations (SBR) detailed in October 2021.

Under these new regulations, NBFC-ULs were identified based on certain quantitative and qualitative parameters.

The parameters included size and leverage, inter connectedness with the financial system, complexity of business, nature and type of liabilities, group structure and segment penetration.

Eight of these 16 NBFCs are listed including Bajaj Housing’s parent Bajaj Finance. Then there are some like Tata Capital Financial Services, HDFC Bank-promoted HDB Financial Services and Dilip Shanghvi-promoted Shanghvi Finance that are unlisted and will have to list.

Some NBFCs have already made the move to comply with the RBI regulations like L&T Finance Holdings, which is merging its loan-making subsidiary L&T Finance Ltd, the company which is listed as an NBFC-UL.

Similarly, Tata Capital Financial Services, which is classified as an NBFC-UL, will be merged with its parent Tata Capital, creating a base to finally list it within the next two years. Interestingly, Tata Sons, the holding company of the Tata Group, is also classified as an NBFC-UL. In February, ET reported that the group is seeking exemption from the RBI norms.

“The understanding is that the listed holding firms can merge their unlisted large subsidiaries within themselves if they want to avoid listing them. Ultimately, its the company’s call whether they want to keep a separate listed NBFC/HFC, for example, or merge it with the listed holding company,” said Karthik Srinivasan, group head, financial sector ratings, ICRA.

Those on the RBI list include Aditya Birla Finance, the lending subsidiary of Aditya Birla Capital, and Piramal Capital & Housing Finance, the subsidiary of Piramal Enterprises. Both these groups have not clarified whether they are going to merge their subsidiaries with their listed parents or register them as separate companies.

Besides listing, the regulations ask NBFC-UL’s to have board members with experience in running the affairs of an NBFC. These NBFCs have to maintain a tier-1 capital of at least 9%, a leverage requirement prescribed by RBI, and differential provisioning for various asset classes, in line with banking regulations.

  • Published On Aug 28, 2023 at 08:58 AM IST

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