LIC Housing Finance Limited (LICHFL) will raise Rs.1000 Cr thru ECBs for residential development.
The Housing Finance Limited, a subsidiary wing of insurance giant LIC, will raise Rs.1000 Cr through external commercial borrowings (ECBs). An official of the LIC Housing Limited revealed that the fund will be residential – development oriented.
CEO of LICHFL Mr. V.K. Sharma informed the media that the firm plans to raise a fund around Rs.700 to Rs.1000 Cr through ECBs. Yet he said that the decision will be finalized only after the firm’s talk with the Central bank.
The decision seems to be prompted by the new ECBs policy of RBI. Last month the central bank has permitted reputed builders and housing finance firms to raise fund up to a billion dollars through ECBs. RBI is said to allow the builders in view of enabling them to be able to construct affordable homes.
Mr. Sharma told the media that a committee, including some senior officials, has been formed to look into the matter. The committee has been in talks with RBI in relation to the ECB – issues. Mr. Sharma, appeared highly optimistic about the plans of LICHFL, while he was addressing the audience of a property exhibition held in Hyderabad.
Due to many reasons ECBs are more attractive than domestic borrowings. Cost of overseas loans is lower than the domestic borrowings. Besides all these, ECBs is considered as an opening to many global markets.
However Mr. Sharma did not answer to any questions about the time when the firm would raise the residential- oriented fund. He informed that he would be able to say anything about the time of the fund only once the committee completes its talks with RBI. He expressed his hope that the decision will come soon.
With the decision to raise a fund through ECBs, the shares of LIC will be cut short to 36.54% from current 40.31%. Foreign and domestic investors have around 40 % plus share of LICHFL and others hold the rest of the shares.
This year, LICHFL targets housing loans worth Rs.25,000 Cr against the Rs.20,000 Cr home loans of the last year. At present, LICHFL provide home loans at 10.25%.
