"PNBHFL will be required to raise capital to fund its growth plans and provide a cushion in view of the increased vulnerability of the corporate loan book and rising funding costs for the housing finance sector in general," said the rating agency.
"CARE will continue to monitor developments with regard to the above and will take up review of rating when more clarity emerges on the above aspects," it said, adding that the impact of stake sale announced by the PNBHFL's promoter Punjab National Bank is also to be seen.
However, it said that PNBHFL continues to derive strength from its experienced management team, brand linkages with PNB, consistent growth in the loan portfolio and profitability profile.
Although the non-performing asset for the wholesale loan book is nil (as on December 31 last year), its vulnerability is expected to remain relatively high and could impact asset quality profile to some extent over the next one to three years.
The wholesale loan book forms nearly 22 per cent share of assets under management. Sustainability of the asset quality performance in these segments will be critical for the credit profile of the company going ahead, said CARE.