The global financial turmoil has forced LIC Housing Finance, the country’s second mortgage player, to go slow on a proposed Rs 300-crore real estate fund.
“We are still in the process of identifying a partner. We are not holding the plan, but going a bit slow on it as the present market condition demands greater due diligence,” the company’s CEO RR Nair said. The fund proposes to finance 50-60 development projects over a period of 12-18 months.
Earlier this week, Reliance Capital, which was looking at a $1-billion private equity fund by March 2009, said it may kick off operations by January but with a fund size of $400-500 million.
LIC Housing Finance also said it may lower interest rates if the cost of funds and availability improve after steps initiated by the Reserve Bank of India (RBI) over the past few weeks.
“Our lending rates are primarily linked with the prime lending rates (PLR), so if the present policy measures by the regulator translate into availability of the funds, we will definitely take a call on that (lowering lending rates),” said Nair.
But the mortgage arm of Life Insurance Corporation of India (LIC) is set to start its financial services subsidiary company, LIC HFL Financial Services. “The CEO is already in place and we expect the company to be operational by December this year,” Nair said.
Initially, the company will start with five offices in Maharashtra and within a year, it hopes to add 20 more branches across the country. “In four years, we plan to set up 500 offices in different cities,” Nair said.
The initial capital for the company, which will sell home loans, mutual funds, credit cards and LIC and other third-party products, will be Rs 7 crore.
