The budget has made a very clear distinction between strong NBFCs which are only facing a liquidity problem and weak NBFCs that are facing a problem of liquidity and solvency. While LIC Housing belongs to the former group, DHFL obviously belongs to the latter group. The benefits announced in the budget will benefit the stronger NBFCs and not the weaker NBFCs. Let me highlight some of the benefits for NBFCs in the budget.

· The budget has announced a special line of credit by banks to NBFCs to the tune of Rs.134,000 crore. That is a positive move as it will solve the problem of liquidity as repayments pile up in the next few months. This will also have a partial guarantee by the government. However, the condition is that the lending must be done only to sound NBFCs. So companies like DHFL may not really benefit.

· The budget has moved the regulation of housing finance companies (HFC) from the National Housing Bank (NHB) to the RBI. This will bring about better regulation and is likely to be a greater benefit to strong NBFCs than to weak NBFCs.

· Lastly, the budget has also announced that maintenance of debenture redemption reserves (DRR) against NBFC borrowings will not be required any longer. That will reduce the cost of funding for NBFCs and they can easily borrow against NCDs and bonds. Here again weaker NBFCs will not find appetite in the market for their bonds.

To sum up and answer your question, LIC Housing in your portfolio will benefit from the budget announcements but it will not make much of a difference to DHFL. You can take a decision on your NBFC holdings accordingly.