Image Source : Construction World
SRG Housing Finance Ltd has announced its intent to consider the issuance of Non-Convertible Debentures (NCDs) on a private placement basis, marking a strategic move to strengthen its funding base and support future lending operations. The proposal will be reviewed at the company’s upcoming board meeting scheduled for August 1, 2025, and could involve multiple tranches depending on market conditions and business requirements.
Proposal Overview and Strategic Intent
The proposed NCD issuance is part of SRG Housing Finance’s broader capital management strategy aimed at enhancing liquidity and supporting its housing finance portfolio.
Key highlights of the proposal:
- The board will evaluate the issuance of secured or unsecured redeemable subordinated Tier-II NCDs
- The total amount under consideration is up to Rs 250 crore
- Instruments may be denominated in Indian rupees or foreign currencies
- The issuance will be executed in one or more tranches, depending on investor appetite and timing
- Funds raised will be used for onward lending, refinancing, and general corporate purposes
This move aligns with the company’s goal of maintaining a diversified funding mix while ensuring compliance with regulatory capital adequacy norms.
Regulatory Framework and Governance
The proposed issuance will be governed by multiple regulatory frameworks, ensuring transparency and investor protection.
Compliance considerations:
- Issuance will follow provisions under Sections 42 and 71 of the Companies Act, 2013
- Adherence to SEBI’s Issue and Listing of Non-Convertible Securities Regulations, 2021
- Compliance with RBI’s Master Directions for Housing Finance Companies
- Board empowered to determine terms such as coupon rate, tenure, security, and pricing
- Issuance will remain within the company’s approved borrowing limits
The board may delegate execution authority to designated committees or officers to streamline the process and ensure timely execution.
Capital Structure and Borrowing Limits
SRG Housing Finance has also proposed an increase in its borrowing powers to accommodate future debt issuances and operational needs.
Capital structure updates:
- Borrowing limit proposed to be raised to Rs 1,100 crore, up from previous thresholds
- This includes all forms of debt: NCDs, bonds, term loans, commercial papers, and other instruments
- Borrowings may be secured through mortgages, pledges, or hypothecation of company assets
- The increase is subject to shareholder approval at the upcoming Annual General Meeting
This expanded borrowing capacity will provide the company with greater flexibility to respond to market opportunities and scale its housing finance operations.
Business Context and Growth Outlook
SRG Housing Finance operates in the affordable housing segment, offering loans for construction, renovation, and property acquisition. The company has seen steady growth in recent quarters, supported by rising demand in Tier 2 and Tier 3 cities.
Sectoral backdrop:
- India’s housing finance market is expanding, driven by government incentives and urbanization
- Demand for low-ticket housing loans remains strong, especially in semi-urban regions
- Regulatory push for financial inclusion and credit access supports long-term growth
- Competition from banks and NBFCs is intensifying, prompting firms to optimize capital structures
SRG’s focus on prudent underwriting and regional penetration positions it well to capitalize on these trends.
Conclusion
SRG Housing Finance’s proposal to issue Non-Convertible Debentures reflects a proactive approach to capital management and business expansion. By leveraging debt markets, the company aims to enhance its lending capacity, meet regulatory requirements, and support its growth trajectory in the affordable housing segment. The board’s decision on August 1 will set the tone for its funding strategy in the coming quarters.
Sources: SRG Housing Finance Ltd investor filings, BSE India, Rediff MoneyWiz, MarketScreener, Trendlyne, SRG Housing AGM Notice 2023, Economic Times, Financial Express, Hindu BusinessLine, Reuters India, Mint
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