The Hindu Business Line : LIC Housing to raise fresh equity this year — Offers loans against approved financial assets

LIC Housing Finance Ltd (LICHF) plans to raise additional funds through the equity route by the end of this fiscal to shore up its capital adequacy ratio. The amount and structure would be decided by the end of the third quarter, according to Mr S.K. Mitter, Director and CEO.

The company currently has a capital adequacy ratio of 15 per cent. But as the National Housing Bank has raised the risk weightage requirement for housing finance companies to 75 per cent from 50 per cent, LICHF's ratio is likely to fall below 12 per cent, Mr Mitter said. For 2005-06, the company has targeted borrowing of Rs 4,500 crore as resources mobilisation.

Of this, it has already raised Rs 1,400 crore in the first six months through a combination of non-convertible debentures and term loans.

For the half-year ended September 30, the company had individual housing disbursements of Rs 2,108 crore against Rs 1,187 crore last year. The total outstanding is Rs 13,587 crore, which is a 26 per cent growth year-on-year. The non-retail sector is worth around Rs 700 crore.

Mr Mitter also said that interest rates could see an increase later this year. "There will be substantial strain on margins and it definitely calls for raising of interest rates."

Meanwhile, the company launched a scheme called `New Griha Laxmi' today. Under this scheme, customers can take home loans against the security of approved financial assets like bank fixed deposits, national savings certificates, and life insurance policies.

These loans will be available up to 95 per cent of the liquid value of the security, subject to a minimum of Rs 50,000. There is no upper limit on the amount that can be borrowed or on the term of loan. It is a floating rate scheme and the rate of interest is 8.5 per cent.

Repayment of the loan can be through EMIs or by way of interest. According to Mr P.K. Rath, General Manager (Marketing), this product is targeted at those people who may not otherwise meet the company's credit appraisal norms but who invest in bank fixed deposits or life insurance policies - for instance, self-employed people and small traders.

LICHF is hoping to target the 17 crore policyholders of LIC, its parent company, for this scheme. Also, in November it will be offering home loans at a discounted floating rate of 7.25 per cent against 7.5 per cent. Customers are allowed to combine the new loan plan with a core home loan.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
SBT gets national award

Rupee ends lower; bond prices dip

UCO Bank H1 net dives to Rs 143 crore

Magma Leasing net profit rises 37% to Rs 6.51 cr

LIC Housing to raise fresh equity this year — Offers loans against approved financial assets

Exide promoter Raheja to head ING Vysya Life — Completes 50 pc stake buy

General insurance officers seek early wage pact

Karnataka Bank extension counter

IOB ties up with Visa to offer debit cards

Union Bank finalising public issue plans