Mumbai, June 19 (TIWN) The proposed capital infusion in PNB Housing Finance Limited (PNBHF) would strengthen the company's equity buffers to absorb any asset-side stress, said India Ratings and Research (Ind-Ra).

According to the ratings agency, it will also provide the company with the capital needed to grow the franchisee.  "PNBHF had seen heightened delinquencies and a decline in asset under management in the last two years due to a challenging operating environment amid the Covid-19 pandemic," Ind-Ra said in a report. 

"The company has already increased the provision cover for standard as well as stage 3 assets. It also plans to increase its focus on the affordable 'Unnati' segment which offers a higher yield on a lower ticket size loan." 

On May 21, 2021, PNBHF announced a capital infusion plan of Rs 40 billion through a preferential issue of equity and warrants which would increase its net worth by almost 50 per cent to over Rs 120 billion.  "The proposed infusion is significantly higher than earlier planned."