The Hindu Business Line : LIC Housing Fin may rework plans on raising resources

THE National Housing Bank's move to increase the risk weightage requirement for housing finance companies may lead LIC Housing Finance to rework a part of its plans on raising resources.

LIC HF shareholders had, at a recent AGM, passed a resolution authorising the board to raise resources, subject to an overall limit, according to a notice sent to the BSE.

The company, said Mr S.K. Mitter, CEO, was yet to formulate concrete proposals on the matter. "We have to see how best we can go ahead with our plans. Nothing is ready at the moment," he told newspersons.

NHB, it may be recalled, had recently hiked the risk weightage requirement for housing finance companies from 50 per cent to 75 per cent. The move, however, is not expected to affect companies that are well capitalised.

Leading player HDFC, for instance, has reportedly claimed that its capital adequacy ratio (at over 16 per cent) makes it easy for it to absorb the increase in risk weight, and that it will not have to mobilise capital further.

Current year's target

LIC HF, Mr Mitter said, had set targets for the year — Rs 6,270 crore of sanctions and Rs 5,700 crore of disbursements. At the end of the second quarter, it has achieved Rs 2,035 crore and Rs 2,108 crore, respectively. Its profit target for the current fiscal, incidentally, is Rs 300 crore, up from about Rs 140 crore reached last year.

The company, on another front, hopes to reduce NPAs, which at Rs 530 crore, stand at 4.8 per cent, higher than the industry average of two per cent. It plans to bring it down to about 3.4 per cent, a level that was achieved in 2003-04.

Towards this end, LIC HF has bolstered its recovery mechanism by setting up special recovery teams.

Professional recovery agents are also being recruited, marking a shift in its allegedly `soft' stance on loan recovery. Further, LIC HF is set to mark down its semi-rural focus, especially after a few bad "experiences" in non-metro markets.

The company, Mr Mitter said, had lately used the new securitisation legislation in this regard. It has sent about 5,800 letters to loan-takers (involving Rs 380 crore), an exercise that has yielded about Rs 33 crore, so far.

Subsidiary in expansion mode

KOLKATA: LICHFL (Care Homes) Ltd, a subsidiary that is now setting up a special residential project in Bangalore, has chartered an expansion plan, marked by similar projects in other key centres.

The company has started talking to some State governments, including those in West Bengal and Goa, to promote what will be called "assisted living community centres" for senior citizens.

"We are eyeing a 10-acre land near Kolkata. We have presented a case before the State Government," said Mr S.K. Mitter, CEO of LIC Housing Finance. He added that other locations might include Kochi and Puri. The community centres will feature residential units complete with a number of services, it is pointed out.

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