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India : LIC HFL gets approval from RBI to raise $300 million ECB
Publish Date : 21-Jan-2014
The nation’s third biggest housing finance firm, LIC Housing Finance Ltd (LIC HFL), has got sanction from the Reserve Bank Of India to gather $300 million (over Rs 1,800 crore) from overseas markets through external commercial borrowings (ECBs).
"We have got the apex bank's approval two days ago and the fund raising activity should be completed in the next two to three months," Sunita Sharma, MD and CEO, LIC HFL, said.
The housing finance arm of the state-run insurance major Life Insurance Corporation will deploy the finances as loans to home buyers in the reasonably priced housing segment.
Under this agreement the average loan dispersal would vary between Rs 14 lakh and Rs 15 lakh.
Presently, LIH HFL's average loan dispersal amount is Rs 19 lakh, with a focus on the mid-income homebuyers.
She said, "If the rupee goes up and the dollar comes down then there could be an interest advantage. Our only advantage now is that we have another avenue to raise funds. It is a way of risk distribution. We have always been operating in one product market and now we need to distribute our risks."
Despite a fall in the economy and sluggish home sales in the October to December third quarter LIC HFL recorded a 38% jump in net proceed to Rs 326.59 crore and a 21% increase in revenue to Rs 2,343 crore over the same period a year ago.
"The company has been operating in the mid-income segment and targeting end-users and there hasn't been any challenge with respect to demand in this segment. Our focus is on the salaried group, majority of them being from the PSU sector. The outside economy doesn't impact them," Sharma said.
