The National Housing Bank (NHB) is in the process of establishing linkages between a central registry and state property portals, in a step to prevent real estate frauds involving financing. It is also preparing for a Rs 500-crore bond issue. Chairman and Managing Director R V Verma spoke to Dilasha Seth & Nivedita Mookerji on these issues and more. Edited excerpts:
Will credit availability improve in the coming financial year?
It should be greater, compared with 2011-12. I can’t comment on the overall flow, but growth in the housing loan market could be 20 per cent or so.
We may look at more than 20 per cent growth in the retail housing market. If you take housing finance companies (HFCs) and banks together, the growth is 18 per cent.
NHB is set to receive Rs 1,500 crore from the World Bank for its refinancing project. What is the scheme?
It is a demand-side intervention. The deal is at an advanced stage, and discussions are on with the Bank. We are waiting for final approval. The amount ($300 million or Rs 1,500 crore) will essentially be for individual borrowers in the low-income housing category.
If you look at the gaps on the demand side, these are in the informal sector market. So, you (will) have retail loans of very long tenure, spanning 15-20 years. The interest rate will be lower than at which we are lending today.
HFCs have sought more time from NHB for risk profiling of borrowers. Your comments.
We have issued a clarification and given them time up to April so that they can develop their risk profiling of individual borrowers. It is a very good measure and will streamline lending practices. Today, we and the banks are following risk-based-pricing. Unless it is determined what risk you are facing from the borrowers, how would you price your product?
What is the quality of borrowers at present?
Good. The non-performing assets of HFCs are coming down; they are just 0.6 per cent of the total. It is well contained.
What is the update on the central registry (CR) of property, proposed in the previous Budget for preventing fraud?
The CR’s scope has been expanded to include transactions of factoring. That was a part of the Factoring Bill, now the Factoring Act. Also, we may expand the CR scope further to connect with state governments’ electronic registry of properties. A number of state governments have e-registry facilities and have developed an e-portal for registry of properties. We are talking to many state governments for this.
The CR is aimed at getting all details of the properties, with the titles. This will help lenders as well as borrowers. Once it is in a transparent domain and is accessible to all lenders, frauds on multiple financing will stop. Right now, the registry contains only those properties involving loans. Once we tie up with state registries, we will get properties with no loans attached.
Which is the administrative ministry for matters related to the registry?
We would be acting under the finance ministry’s aegis. We are proposing the first round of meetings with state governments very soon. The ministry of rural development and NHB are the nodal bodies. It is a mid-term project, which may take two to three years.
How many licences did NHB give to HFCs in 2011-12?
We gave four this year. Two from Chennai and one each in Mumbai and Delhi. At present, there are 55 HFCs. There have also been five exits in the past three to four years.
Any need to put a cap on the number of HFCs?
No. The charter is to promote large numbers of HFCs at the local level. Many of these institutions have some local orientation.
When is the mortgage guarantee company being formed?
We are filing an application with the Foreign Investment Promotion Board (FIPB) soon for this. We have all partners and approvals in place, but FIPB will take its own course before we file with the Reserve Bank of India for the certificate of registration. We expect the company to start operation by June 30.
When are you adding five more cities to the NHB Residex?
In the next Residex, for January to March 2012, we will include another five, taking the total number to 20.
There are concerns over corporate governance in real estate companies. Your view.
We are not so much into regulating the sector, but the Real Estate Regulatory Bill will be useful. The sector is not very transparent. There is uncertainty about land, so everyone is out to acquire as much land as possible and sit on it, as the price escalates. So, land policy needs to be tackled at both state and central level.
When are you having the proposed Rs 500-crore bonds issue?
We are planning to come out with its very soon. We are continuously scouting the market to see if better rates are possible. The interest rate outlook will also determine entry. April may be a good time. After March, April will be slack, so there could be more funds available in the market.
