Business Daily from THE HINDU group of publications
Wednesday, May 09, 2007
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Business Daily from THE HINDU group of publications Wednesday, May 09, 2007 ePaper |
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Housing Finance Money & Banking - Fixed Deposits LIC Housing floats FD scheme; looks at containing fund costs Our Bureau
Homing in on FD Outstanding home loan portfolio at Rs 17,000 cr Cost of funds climbed to 10.5% in 2006-07 FD scheme offers 9% interest on 3-year and 9.25% on 5-year deposits
Mumbai May 8 Faced with rising cost of funds, LIC Housing Finance Ltd has for the first time decided to tap the fixed deposit segment to raise Rs 1,000 crore this fiscal. The scheme will offer an interest of 9 per cent per annum on a three-year deposit and 9.25 per cent per annum on a five-year deposit. The minimum deposit is Rs 10,000 with multiples of Rs 1,000 thereafter. "The cost of funds has been climbing and was 10.5 per cent in 2006-07. As 85 per cent of our customers are on floating interest rate loans, we can pass on the interest rate hikes. But we are looking at a better way of containing fund costs, " said Mr S.K. Mitter, Director and Chief Executive, LIC HFL. "We are seeking to diversify our sources of funds and de-risk our borrowings by tapping the retail depositors," added Mr Mitter. The outstanding home loan portfolio of LIC Housing Finance stands at Rs 17,000 crore. The company also plans to tap the network of LIC agents for marketing its FD scheme, which will initially be launched in 30 cities across the country. Until three years ago the Life Insurance Corporation of India (the parent of LIC HFL) was the main source of funds for the housing finance company. "In the past three years, however, we have been raising resources through non-convertible debentures and term loans of banks," Mr Mitter said. The FD scheme has been rated FAAA- stable by CRISIL.
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