To encourage fixed rate home loans for the low- and moderate-income segments, the National Housing Bank (NHB) has come out with a special refinance scheme for banks and housing finance companies (HFCs).

Banks and HFCs giving fixed rate home loans up to Rs 10 lakh can get refinance for 15 years from NHB at a concessional interest of 8.60-8.75 per cent, according to R.V. Verma, Chairman and Managing Director, National Housing Bank.

Fixed rate home loans are aimed at mitigating the interest rate risk that retail borrowers face, he added, on the sidelines of a conference where MoUs were signed between Credit Guarantee Fund Trust for Low Income Housing and six institutions, including Bank of Baroda and IDBI Bank.

However, Verma observed that over 90 per cent of the home loans is on floating interest rate due to retail customers’ preference.

“We need to create awareness about the refinance scheme among the lending institutions. Home loan borrowers in the low/moderate-income segments could be benefited if they get fixed rate loans,” he said.

ECB

NHB has received applications from HFCs, such as HDFC, LIC Housing Finance and Dewan Housing Finance, to raise ECBs aggregating $800 million. NHB itself plans to raise around $200 million via ECBs.

NHB has sought clarifications on the stringent requirements for builders, who want to directly access ECB for building affordable housing projects, regarding local regulatory and environmental approvals.

Though builders can raise ECB through NHB, none of them has approached the Bank so far.

Tax-free Bonds

NHB will float tax-free bonds to raise Rs 5,000 crore in the next fortnight, Verma said.

Of the total issue size, Rs 3,750 crore has been earmarked for retail investors while Rs 1,250 crore will be raised through private placement to institutional investors.

NHB sees housing finance in the country growing at 18-20 per cent (or Rs 1.30-1.40-lakh crore credit offtake) in FY2013.

Beena.parmar@thehindu.co.in

Ramkumar.k@thehindu.co.in

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