LIC Housing plans public deposit scheme

With a view to reduce cost of funds and improve spread, LIC Housing Finance is planning to come out with a public deposit scheme in the next few months.

S K Mitter, director and chief executive officer, said though the company had option to raise public deposits in the past, but had not accessed the same. He was in the city to inaugurate Ungal Illam 2006, a property fair.

He added that the company saw higher margin potential in public deposit scheme. The company's cost of fund was 7.6 per cent, while the average yield was 8.8 per cent.

Mitter also said the company had set out a target to reduce gross non-performing assets to one per cent by 2008 from 3.8 per cent as on March 31, 2006. The value of gross non-performing asset was Rs 508 crore. The net NPA stood at 2.12 per cent.

"We are moving on the right direction to reduce NPA and the efforts taken in the recent past have been successful," he added.

On the decline in net profit during Q1, he said the profit was lower because of impact of provisioning norms.

The company targets sanctions of about Rs 8,200 crore and disbursals of over Rs 7,500 crore. As at the end of July, LIC Housing Finance had achieved 20 per cent of its target.

LIC Housing Finance's southern region, which includes Tamil Nadu, Kerala and Pondicherry, plans to disburse around Rs 1,650 crore this financial year against Rs 1100 crore last year.

The Chennai area office alone is planning disbursals of Rs 650 crore during the year and has already disbursed over Rs 250 crore.