Mumbai, June 24: The Housing Development Finance Corporation (HDFC) has tied up with with the Rajasthan government to set up a new company. The new firm will primarily focus on fee-based activities like offer advisory services to housing finance companies.

Announcing this at the company's 20th annual general meeting in Mumbai on Tuesday, HDFC chairman Deepak Parekh said the housing finance major will pick up a 36 per cent stake in the new venture.

The company obtained shareholders's approval at the AGM to increase the aggregate limit of the equity holding of foreign institutional investors (FIIs), overseas corporate bodies and non-resident indians to 30 per cent from the existing level of 24 per cent.

The shareholders also approved the ordinary resolution increasing the borrowing limit of the company to Rs 12,500 crore.

The premier housing finance company, which posted a net profit of Rs 247.89 crore in 1996-97, up from Rs 195.69 crore in the previous year, has declared a dividend of Rs 45 per share of Rs 100.

HDFC recently entered into an MoU with the Rajashtan government to set up the new venture in which the state government will hold a 40 per cent stake in the venture. The Infrastructure Leasing & Financial Services will pick up a 24 per cent stake in the new outfit. To start with, it will have an equity base of Rs 1 crore.

HDFC also plans to participate in a housing finance company in Bangladesh. However, in the Bangladesh venture, it will not pick up more than 15 per cent of its equity, sources said. While a local company will have the majority stake in the venture, the International Finance Corporation (IFC) will will also chip in as a co-promoter. The premier housing finance company is planning to set up a pension fund. It has already written to the Life Insurance Corporation on this issue, Parekh said. "We plan to have a tie-up with LIC to float the pension fund," the HDFC chairman said. However, it has no plans to enter into the health insurance business even though it is flooded with a number of proposals from renowned hospitals.

HDFC has already signed an MoU with Standard Life Assurance to make a foray into life insurance.

The housing finance company, which set up its first international branch in Dubai in 1996-97, has plans to open more branches in other Middle-East countries like Kuwait, Qatar and Oman. It was also invited to undertake assignments for a building society in Kenya and a housing sector study in Tanzania. The company managed to raise its sanctions and disbursals during the first quarter of the current year by nearly 25 per cent over the corresponding period in the last year. The capital adequacy ratio of HDFC as on March 31, 1997, was 20.8 per cent.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.