HUDCO Aims for Elimination of Non-Performing Assets within 18 Months Period
Mumbai: HUDCO, the Housing and Urban Development Corporation, is aiming for zero bad loans in the next 18 months, with no new slippages in FY25. To tackle legacy stressed assets, the firm is utilizing bankruptcy courts and one-time settlements proactively.
This state-owned housing and infrastructure financing company has demonstrated impressive progress in reducing Gross Non-performing assets over the past two years, reaching a mere 1.67% for FY25. Such improvements hint at HUDCO's commitment to maintaining a low credit risk portfolio, primarily focusing on lending to state governments and their linked entities, which usually come with guarantees.
The corporation's aggressive approach is exemplified by its March quarter consolidated net profit surge of 4% to Rs 727.74 crore, up from Rs 2,194.04 crore in the previous year. Consequently, the total income has risen to Rs 2,854.91 crore in 2024-25 compared to Rs 2,194.04 crore in the year prior. Such growth is impressive, given that HUDCO's net profit increased to Rs 2,709.14 crore in FY25 from Rs 2,116.69 crore in the previous year.
In a bid to boost its loan disbursements, HUDCO has announced a target of Rs 50,000 crore this year, representing a 25% increase in the new fiscal year. The lender also plans to significantly increase its borrowing plan to Rs 65,000 crore. In FY25, HUDCO has already recorded a 35% loan growth, ending the fiscal year with a borrowing of Rs 55,000 crore. To bolster its financing activities, the company intends to raise $2 billion through overseas borrowing this financial year.
Despite the impressive advancements, specific strategies employed by HUDCO to attain zero bad loans remain undetailed. However, given the low credit risk profile and diversification through financial instruments, we can anticipate the firm focusing on refining credit assessment processes, improving risk management frameworks, and possibly concentrating on lower-risk borrowers. Nevertheless, it's essential to monitor HUDCO's progress closely in the upcoming months to verify its commitment toward achieving zero bad loans.
HUDCO, in its effort to enhance its financial standing, is aiming to boost its loan disbursements to Rs 50,000 crore this year, a 25% increase from the previous fiscal year. To fund this expansion, the company plans to raise $2 billion through overseas borrowing this financial year, demonstrating a significant focus on investing and business growth. The corporation's commitment to maintenance of a low credit risk portfolio also implies a potential concentration on lower-risk borrowers and refining credit assessment processes, in order to minimize any potential financial setbacks.
