Business Standard

Hudco Raises Rs 80 Crore Via Priority Sector Bonds

Image

BUSINESS STANDARD

Housing and Urban Development Corporation Ltd (Hudco) has mobilised Rs 80 crore through a tax-free priority sector bond issue. The issue was oversubscribed by 50 per cent in three working days.

Though the company had received bids worth Rs 120 crore, it has decided to retain a sum of Rs 80 crore which is maximum permissible as per the government approval.

"Hudco has been able to mobilise resources through tax-free bonds at a rate which is competitive to the Reserve Bank of India (RBI) rate," Hudco chairman and managing director V Suresh said here.

The cut-off rate was fixed at 9 per cent per annum for 10 years and 8.4 per cent per annum for 5 years, with interest payable yearly. The only other tax-free instrument available to the individual investors is the RBI relief bond at 8.50 per cent per annum with interest payable half yearly, Suresh said.

 

He added that the company has thus decided to pass on the benefit to its customers by offering a further reduction in interest rates up to 0.25 per cent for loans above Rs 20 lakh. Hudco has also reduced the processing and administrative fees by 0.30 per cent with effect from January 2.

Hudco's initiative came in the wake of the recent reduction in interest rates by the State Bank of India. Commenting on the interest rate war and on the commercial banks becoming aggressive in the sector, Suresh said: "Hudco Niwas offers the lowest equated monthly instalments to customers, thus ensuring maximum savings and benefits to home loanees."

Suresh said the company, which at present has a market share of about 10 per cent in the housing finance segment, is targeting a 30 per cent market share within the next few years. He added that continuous innovation and research is being done to offer best products to the customer at the lowest possible price. Hudco is also likely to tie up with some commercial banks to disburse its housing loan product. It is also foraying into secondary cities in a big way to increase disbursals, he said. It is also planning to foray into newer areas of consultancy and insurance, he said.

Hudco's bond programme was rated AA+ by CARE, indicating high quality by all standards and was classified as high investment grade.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Jan 03 2002 | 12:00 AM IST

Explore News