The National Housing Bank (NHB) plans to raise Rs 1,000 crore during the current financial year through issue of priority sector bonds.
The housing bank will raise this money in two tranches.
As the first leg of the borrowing programme, the bank plans to tap the market in June, 1997 with an offer of priority bonds worth Rs 250 crore with a green shoe option to retain another Rs 250 crore.
In the second leg, which has been planned for March, 1998, the bank will raise another Rs 250 crore with an option to retain a further Rs 250 crore.
The National Housing Bank is offering two types of bonds one with a maturity of 5 years and the other with a maturity of 7 years.
We are watching the market and based on the cut in term deposit rates by banks, we will decide on the coupon rate on our forthcoming bond issue, said P P Vora, chairman and managing director of the NHB.
Meanwhile, the bank raised Rs 500 crore in March, 1997 with a bond issue of Rs 200 crore on a option to retain a further Rs 300 crore.
While the 5 year bonds it issued carried an interest rate of 13 per cent, the 7 year bond was at an interest rate of 13.5 per cent. National Housing Bank officials indicated that the rate of interest for the forthcoming bond issue will be less than 13 per cent as interest rates are moving southwards.
The proceeds of the issue will be deployed in the area of refinancing housing finance institutions and direct finance to housing boards and state housing agencies.
The bank which expects to end the year with total business of Rs 500 crore is targeting advances worth Rs 800 crore in 1997-98.
Vora has ruled out the possibility of National Housing Bank utilising the money raised through the bond issue to repay the soft loan of Rs 700 crore it has taken from the Reserve Bank of India .
While the Reserve Bank of India loan is repayable in a one-shot bullet payment after 15 years, the bonds will be due for redemption after a period of 5-7 years.
The National Housing Bank has come into media glare for its ongoing tussle with ANZ Grindlays Bank over an issue relating to the 1992 securities scam.
The National Housing Bank had paid Rs 506 crore to ANZ through nine account payee cheques which the latter credited to the account of stock broker Harshad Mehta.
The dispute arose as National Housing Bank claimed that ANZ Grindlays Bank had no authority to credit the account payee cheques to Mehtas account.
