Mumbai, June 5: The National Housing Bank (NHB) has drawn up plans to raise Rs 300 crore through seven-year tax-free bonds. The proceeds will be used to finance one lakh housing units in rural India under the Swarna Jayanti Housing Finance Scheme during the current year, as announced by the finance minister in the Union budget for 1998-99. The NHB has not yet finalised the coupon on the bonds.The apex housing bank has already moved the finance ministry with the tax-free bond proposal. The ministry's green signal is expected by the end of July. "Provided we get the clearance in July, we will hit the market some time in August," said NHB chairman-cum-managing director PP Vora.
The NHB will privately place the bonds with banks. Since subscription to bonds issued by the NHB qualifies as a priority sector advance, Vora said there will be no problem in mopping up Rs 300 crore.
The housing bank has said that it may come out with another seven-year bonds issue during the second half of the current year.
Itis yet to finalise the amount it will raise through the second issue.In August 1997, the NHB launched the Golden Jubilee Rural Housing Finance Scheme. The target of financing 50,000 rural housing units - involving a loan component of Rs 500 crore - has already been achieved. For the current year, the government has set an enhanced target of funding one lakh housing units involving a loan component of Rs 1,000 crore.
The refinance disbursed by the NHB is expected to touch Rs 600 crore by the end of June 1998, with the share of urban and rural housing in the ratio of 3:2. The offtake of refinance from the NHB during 1998-99 has been targeted at Rs 800 crore.
The NHB slashed its interest rates on refinance to primary lending institutions by 50 to 150 basis points under various slabs of loans to individuals for construction or acquisition of new dwelling units. The revised rates of interest have come into force from June 1, 1998.
The maximum reduction of 150 basis points is in respect of loans above Rs 2lakh to Rs 5 lakh. The target beneficiary of the interest rate reduction will be the low and middle income categories of borrowers. The NHB has said that the revision in interest rates follows the importance attached to housing by the government of India.
The NHB's move is expected to trigger an across-the-board reduction in interest rates on housing loans by housing finance companies. Global Housing Finance Corporation has already reduced interest rates on individual housing loans by 0.5-1 per cent and others are expected to follow suit.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
