The Housing and Urban Development Corporation (Hudco) is to expand its equity base by Rs 400 crore, up from the current Rs 360 crore.
The expansion has been approved, in principle, by the government although the time of investment has not yet been specified, said V Suresh, the company's chairman and managing director.
Equity expansion becomes crucial for Hudco which is increasingly into funding urban infrastructure projects. The sector is growing at twice the rate of growth in the housing sector.
Suresh said the ratio, with regard to allocation of funds between housing and infrastructure projects, will change form the present 60-40 to 50-50. The larger equity will help the corporation leverage itself better and borrow long term funds.
At present, there is an asset-liability mismatch. Borrowings, as a rule, have a less than 10-year tenor while typical Hudco loans are for periods ranging from 10 to 30 years.
In this context, housing finance companies have appealed to the government for increased access to banking sector funds. At present, the sector gets only 1.5% of incremental deposits and the plea is to increase it to atleast 4%, Suresh said. Long term pension, provident and insurance funds will also have to be accessed if the housing and infrastructure needs of the country are to be met.
Urban infrastructure will be a key focus area for Hudco.
To fund these and its regular housing programmes, Hudco is to come out with the one more bond issue on the lines of last year's infrastructure bonds.
Further, it has also drawn up plans to tap public deposits within the country. Foreign lines of credit from ADB, World Bank and other soft lending institutions like KFW, Germany and OECF, Japan are being considered.
In Tamil Nadu, the corporation is looking to fund the transport sector in a big way. This will cover the state government's efforts to build 50 new bridges and the Karur municipality's BOT bridge project. The Coimbatore bypass road will also, in all likelihood, be funded by Hudco.
For the 50 bridges, Hudco will be setting aside Rs 170 crore while the widening and improvement of radial roads leading to Chennai will be funded to the extent of Rs 147 core.
According to Suresh, Hudco has targeted to sanction Rs 3,200 crore, while disbursement will be around Rs 2,300 crore. For the entire Ninth Plan period, the corporation will aim at disbursing Rs 12,500 crore while sanctions will stand at Rs 15,000 crore.
