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Moumita Bakshi Chatterjee

New Delhi, Aug 25 National Housing Bank alongwith United Guaranty Corporation, International Finance Corporation and Asian Development Bank, has sought FIPB’s approval to form a mortgage guarantee joint venture company.

NHB is expected to hold 43 per cent stake in the joint venture company initially, with UGC (wholly-owned subsidiary of AIG Group) holding about 41 per cent stake, while the shareholding of ADB and IFC would be pegged at eight per cent each.

Sources said that according to agreement, UGC would have the Right of First Refusal to subscribe to additional shares of the proposed venture in case any of the other shareholders forego their right to subscribe to pro-rata portion of additional share to be issued by the new company. In such a scenario, the shareholding of UGC may over 41 per cent.

Sources said that while the aggregate foreign holding is presently proposed to be 57 per cent, it could increase or decrease under specific circumstances. However, the foreign holding in the company would not exceed 88 per cent.

According to the proposal, the total authorised capital could be increased from an initial Rs 750 crore to Rs 1000 crore.

“The total investment being mulled by the joint venture partners, at the authorised capital of Rs 1000 crore, is up to Rs 430 crore for NHB, up to Rs 410 crore for UGC and up to 80 crore for ADB and IFC, respectively.

The company would be initially capitalised at Rs 120 crore,” sources pointed out.

Given its skills in mortgage guarantee insurance business, UGC would act as the technical partner and manage the day-to-day operations.

The joint venture would be a mortgage guarantee company and provide guarantee to lenders in respect of their mortgage loans to borrowers.

“The joint venture company will guarantee to repay the lender for any credit loss that they incur (on a per-determined amount) with regard to a mortgage loan, if a borrower defaults on the loan and the proceeds of the sale of the property is insufficient to cover the outstanding amount owed by the borrower,” sources added.

When contacted, the Chairman and Managing Director of NHB, Mr S. Sridhar, declined to either confirm or deny the specifics of proposal.

More Stories on : Mortgage | Regulatory Bodies & Rulings

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