The Hindu Business Line : NHB wants RBI to handle some regulatory functions — We can focus better on underserved sections: P.K. Gupta

THERE is a fit case for the Reserve Bank of India to take over at least part of the regulatory functions of National Housing Bank (NHB), feels the Chairman-cum-Managing Director, Mr P.K. Gupta.

"We could instead play a critical role in other areas", he says, adding that viable programmes could well be identified for NHB to participate in. He also addressed a few issues relating to United Bank of India, his other charge. Excerpts:

How do you view the consolidation in the housing finance sector?

The consolidation you are referring to has happened to some extent, thanks to integration among housing finance companies. Banks, which currently hold a major chunk of the housing finance market, have tried hard to increase their penetration on this front. The number of housing finance companies, the ones that do only this business and little else, has reduced. Banks are developing fresh delivery channels and tapping new clients.

Is there a case for moving NHB away from the RBI fold, hiving it off as an independent entity and actually offer a stake to the public?

No. There is no point in doing this. As things stand, we (formed under the National Housing Bank Act) act as the main agency for supporting housing finance institutions. NHB now provides them with directions for growth. But there is perhaps a case for the RBI, the banking regulator, to handle some of the regulatory functions that we currently deal with. In such a situation, we can be able to pay attention to other issues.

What exactly are you referring to here?

We will have to see whether we can play a role in serving the segments that have little access to housing finance. As you know, there are geographical areas and customer segments that are largely underserved by housing finance providers. This needs to be addressed in a serious manner, perhaps through programmes that are economically feasible.

Are your negotiations with Bank of Baroda over NHB's stake in BoB Housing progressing?

Considerable progress has been made and the process (of furthering the talks) is at a critical stage. Valuation of BoB Housing, which is one of the bank's subsidiaries, has been a major issue, as it is in all such instances. We have taken note of the fact that the BoB brass has expressed its intention on the matter. Both parties will now have to see how best the deal can be worked out.

What are UBI's accumulated losses now?

We are left with about Rs 100 crore now. This is a clear development, considering the losses, (Rs 278 crore) we had in March 2005. The bank hopes to make it up in due course. Let me tell you that our CAR at 15.6 per cent is quite decent; it will remain comfortably above 12 per cent even with the kind of business growth that has been projected.

What has been the impact of the recent wage revision?

This has involved roughly Rs 100 crore. If you consider the 9-month period ending December, our operating profit and net profit have increased to Rs 490 crore and Rs 175 crore, the figures for last year's corresponding period being Rs 470 crore and Rs 165 crore, respectively. Considering the wage revision and the lower income from trading in g-secs, we think the profitability position is satisfactory.