The Hindu Business Line : LIC Housing Fin sets up financial services arm

The new company will market and distribute all financial products such as home loans, insurance, mutual funds, credit cards and other third party products.

Radhika Menon

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Mumbai, June 26 LIC Housing Finance Ltd has floated a subsidiary to sell financial products including home loans, mutual funds and insurance policies.

The new company, LIC HFL Financial Services Ltd, will start operations in the next two to three months.

Mr R.R. Nair, Director and Chief Executive, LIC Housing Finance Ltd (LIC HFL), said: “This will be a financial services company which will market and distribute all financial products such as home loans, insurance, mutual funds, credit cards and other third party products. While it will distribute only LIC HFL’s home loans and LIC’s insurance policies, in the case of other financial products, we may tie up with other companies”.

Mr Nair said that LIC HFL hopes to diversify into more areas by setting up the new company. This will help the housing finance company have an organised channel of distribution that would be professionally managed.

“The company will self –sustain itself by earning its own revenue through fee-based income. It will not be capital- intensive as it will require only working capital,” said the new Chief Executive, who took over in April this year.

Ms Shobhana Murali, who was earlier handling corporate communication at the Life Insurance Corporation of India, will head the new financial services company. Apart from the key management posts, the rest of the staff in LIC HFL Financial Services will be externally recruited.

Initially, the new company will launch operations in the metros and then fan out into different parts of the country.

Venture capital fund

LIC HFL also plans to kick off a venture capital fund this year. The fund was incorporated in February last and may begin with a corpus of Rs 500 crore to start with.

“This will be a realty fund, which will invest in housing projects and new constructions. Besides LIC HFL, LIC may also participate in this fund. We are also trying to rope in some more like-minded partners,” Mr Nair said.

A fund manager will soon be appointed, he added.

Targets

LIC HFL registered a 38 per cent growth in loan disbursements in the last financial year at Rs 7,071 crore, higher than the industry’s average growth of 8-9 per cent. “This year we hope to do better than last year,” Mr Nair said.

While admitting that there was pressure on lending rates with RBI’s latest hike in the repo rate and CRR, Mr Nair said that a call on interest rates would be taken in July.

More Stories on : Housing Finance | Financial Services | Venture Capital

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