HOUSING FINANCE COMPANIES: ON A HOT TIN ROOF
Article Abstract:
The banks are entering the house financing segment as they face default of payments by corporates and strict non-performing assets (NPAs) norms. Banks want to increase their exposure in housing sector. State Bank of India has increased its exposure in housing loans to Rs1,000 crore from Rs650 crore even when it has 26 percent stake in SBI Home Finance. The housing loans are seen as most secure and liquid. Housing Development Finance Corporation (HDFC) and LIC Housing have posted a growth of 30 percent in both sanctions and disbursals. Due to long term lending and short term borrowing, housing finance companies have asset liability mismatches. According to a market study by SBI Cap only 25 percent of loans for house purchase comes from the housing finance companies. The total demand for housing in the Ninth Plan period is estimated at 16.6 million units. The investment needed in the urban areas alone is Rs1,213.70 crore. National Housing Board has approved 26 Housing finance companies (HFCs) and 15 are companies sponsored by banks or institutions. LIC Housing depends on concessional loans from Life Insurance Corporation and refinance from NHB. Though the banks offer lower rates, sanctioning process by HFCs are faster. The average cost of the borrowing for banks works to 10-11 percent and they lend at 14-15 percent. The average cost of HFCs is 13-14 percent and they lend at 15-17 percent. HFCs are also not able to recover loans in time as large builders default payments. (rk)(m)
Comment:
The banks are entering the house financing segment as they face default of payments by corporates and strict non-performing assets (NPAs) norms.
Publication Name: Economic Times
Subject: Business, international
ISSN: 0013-0389
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
HDFC LAUNCHES NEW LOAN SCHEME
Article Abstract:
The Housing Development Finance Corporation introduced a new loan product called building regularisation loan on July 24, 1998. This loan can be availed by house owners who want to regularise their unauthorised constructions. The government has recently passed an order that unauthorised constructions can be regularised by paying a penalty. The loan can be taken for a maximum of 100 percent of the regularisation fee. The loan carries an interest rate of 12 percent and has a repayment schedule of 3 years. (khr)
Comment:
Introduces new loan product, building regularisation loan, on 7/24/98
Publication Name: Economic Times
Subject: Business, international
ISSN: 0013-0389
Year: 1998
User Contributions:
Comment about this article or add new information about this topic:
HDFC RENEWS MoU WITH STANDARD LIFE
Article Abstract:
Housing Development Finance Corporation (HDFC) has renewed its memorandum of understanding (MoU) with Standard Life of the UK to form a joint venture life insurance company. This will be set up after the insurance sector in India is privatised. HDFC was hoping for a start-up capital of Rs200 crore. The sector is likely to be opened to private players in the next six months after the issue of equity participation by foreign companies is sorted out.(uh)
Comment:
Renews memorandum of understanding with Housing Development Finance Corp to form a joint venture life insurance company
Publication Name: Economic Times
Subject: Business, international
ISSN: 0013-0389
Year: 1998
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: SIEMENS PLANS TO INTEGRATE ITS INDIAN COMPANIES MAC AGRO INDUSTRIES TO MERGE WITH SICAL BOARD OKAYS MERGER OF BPL AUTOMATION WITH PARENT
- Abstracts: DHARAMSI MORARJI CHEMICALS: CORE COMPETENCIES? DHARAMSI MORARJI, UPF TO MERGE. EID PARRY (INDIA)
- Abstracts: INDIAN COFFEE REPORT SUGAR-THE INDIAN SCENARIO: THIRU AROORAN SUGARS
- Abstracts: UREA FIRMS UNFAZED BY UNITS CLOSURE ROURKELA STEEL PLANT ACHIEVES MILESTONE. PUNJAB STEEL UNITS TO DOWN SHUTTERS
- Abstracts: LIQUOR MAJORS DRAW THE LINES OF LICENCE WITH CONDUCT CODE INDIAN LIQUOR BRANDS ON A HIGH, BEAT GLOBAL TREND. MCDOWELL TO SERVE READY-TO-DRINK COCKTAILS