LIC Housing Finance (LICHFL) has drawn up plans to raise about Rs 1200 crore from the market during the current fiscal. The money would be raised through term loans from banks as non-convertible debentures (NCD) and through the securitisation route.
"As per our commercial borrowing plan, we propose to raise about Rs 1200 crore from the market during the current fiscal. We plan to start the borrowings from September-October because then we will need more funds," LICHFL director and chief executive Kranti Sinha said.
He added that the money would be raised in different tranches depending on the requirements of the company and the availability of cheap funds. The first NCD issue, which would be of about Rs 150 crore, would be launched in a month's time, he added.
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Sinha said the company plans to raise about Rs 250 crore through securitisation this year. The company had earlier raised about Rs 80 crore in two tranches through securitisation with National Housing Bank (NHB) acting as a special purpose vehicle.
According to a recent ordinance passed by the government to promote securitisation, a company is allowed to raise money through this route with another company -- which has been created specially for this purpose -- acting as a SPV.
Sinha said it has not yet been decided whether the company would go through the NHB or through any other company floated specifically for this purpose.
The housing finance company will also raise money as term loans from various public as well as private sector banks since banks are required to lend three per cent of their incremental deposits to housing finance. Last year, the company raised about Rs 500 crore through this route.
LICHFL had raised Rs 1527 crore as commercial borrowings last year. Sinha said the target is less this year because the balance would be met through internal accruals. He added that the company expects to clock a 35 per cent growth in disbursements during this year -- above the industry average of about 28 per cent.
The main reasons behind the expected growth are two-fold. The government has allowed income tax exemption even for the second housing loan and thus it is an added incentive for individuals to take housing finance.
Also, since no other similar lucrative rebate is available for individuals in high-income category, the individuals prefer to avail of the benefit and create another asset.