Chennai: LIC Housing Finance intends to float a fund of about Rs 350 crore. The fund, which will invest in large projects, will be created within the next three months, S.K. Mitter, Director and Chief Executive, LIC Housing Finance, told a press conference here on Friday.
Mitter said, after gaining experience with the fund, LIC Housing expects to set up a REIT’ (Real Estate Investment Trust, which is a mutual fund for investing in real estate projects.)
Mitter was here in connection with an ongoing property fair, ‘Living Spaces 2008’, an event sponsored by LIC Housing Finance and organised by The Hindu’s Property Plus. The event opened here on Friday and will close on March 10. (For those who book for property at the fair, LIC Housing offers a special interest rate of 10 per cent (floating) and special processing fee of Rs 5,000.)
LIC Housing, he said, sanctioned Rs 7,385 crore in the current year up to February 29 and disbursed Rs 5,941 crore. Sanctions and disbursements grew 51 per cent and 41 per cent respectively over the corresponding periods last year. Mitter said that LIC Housing enjoys a 150-basis points spread on its loans.
Loan portfolio
Asked if the company would drop interest rates for loans up to Rs 20 lakh, as desired by the Finance Minister, Mitter said that much as LIC Housing would like to do that, it may not be possible for the company, given the firm cost of funds. If the company could access cheaper funds, perhaps subsidised by the National Housing Bank (NHB), it would pass on the benefits to borrowers, he said.
LIC Housing does not take any refinance from NHB, which according to Mitter, is not cheap. Nor is the company (as any other housing finance company) allowed to borrow from overseas markets.
Close to 85 per cent of the company’s loan portfolio is made up of small loans, of less than Rs 20 lakh which, incidentally attracts a lower risk weight of 50 per cent. LIC Housing’s exposure to large projects is about 5 per cent of its portfolio, but it wants to double it next year.
Mitter said, after gaining experience with the fund, LIC Housing expects to set up a REIT’ (Real Estate Investment Trust, which is a mutual fund for investing in real estate projects.)
Mitter was here in connection with an ongoing property fair, ‘Living Spaces 2008’, an event sponsored by LIC Housing Finance and organised by The Hindu’s Property Plus. The event opened here on Friday and will close on March 10. (For those who book for property at the fair, LIC Housing offers a special interest rate of 10 per cent (floating) and special processing fee of Rs 5,000.)
LIC Housing, he said, sanctioned Rs 7,385 crore in the current year up to February 29 and disbursed Rs 5,941 crore. Sanctions and disbursements grew 51 per cent and 41 per cent respectively over the corresponding periods last year. Mitter said that LIC Housing enjoys a 150-basis points spread on its loans.
Loan portfolio
Asked if the company would drop interest rates for loans up to Rs 20 lakh, as desired by the Finance Minister, Mitter said that much as LIC Housing would like to do that, it may not be possible for the company, given the firm cost of funds. If the company could access cheaper funds, perhaps subsidised by the National Housing Bank (NHB), it would pass on the benefits to borrowers, he said.
LIC Housing does not take any refinance from NHB, which according to Mitter, is not cheap. Nor is the company (as any other housing finance company) allowed to borrow from overseas markets.
Close to 85 per cent of the company’s loan portfolio is made up of small loans, of less than Rs 20 lakh which, incidentally attracts a lower risk weight of 50 per cent. LIC Housing’s exposure to large projects is about 5 per cent of its portfolio, but it wants to double it next year.
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