The Housing Development Finance Corporation (HDFC) will take a view on the buyback of its shares in October 2003 when the board meets for its half-yearly results.
HDFC board had in October 2002 passed an enabling resolution to buy back equity of up to 5 per cent of its share capital. It had also announced a bonus issue of one equity share for every share held.
The debt equity ratio post buyback of equity for companies was prescribed at 2:1. However the maximum debt equity ratio for housing financing companies has been prescribed at 16:1.
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The government had in the second week of June notified that the debt equity ratio for listed housing finance companies will be as per the guidelines of National Housing Bank.
NHB is likely to issue its guidelines soon. HDFC chairman Deepak Parekh said the company will approach NHB for approval and decide on further course of action in October.
Before taking a final decision on buyback, the board will have to take a look at the capital requirement for the life insurance company, general insurance company and asset management companies.
He was speaking at twenty sixth annual general meeting of the corporation.
On interest rates, Parekh added that there could be a further reduction in interest rates. The RBI in its credit policy may bring down interest rates by around 25 to 50 basis point.
He admitted that there was a slow down in deposit growth. HDFC had in the previous year bought down interest rates by 200 basis points. It is looking at a mix of domestic and overseas borrowings.