We are trying to ‘catch the wave before rates go up’

Government security yields have gone up a little. But that is fine because our story is the affordable housing finance story. And most of what we borrow gets into affordable housing finance.…you will see that for the schemes that we have in this NCD issue, interest rates are lower than what we offered last time around.

Our overall borrowing cost under the latest NCD issue will be lower by 20-25 basis points. At the end of the day, we have to catch the wave. And yes, we have seen that interest rates have gone up. But then having said that there aren’t too many opportunities available for investors as well.

Loyalty bonus is being given to retail investors, including high net worth individuals. The NCDs have four maturities – three years, five years, seven years and 10 years. All those investors who hold the NCDs for five or more years and if they continue to hold till maturity, then at the time of maturity, along with the proceeds, they will get additional loyalty bonus – for five years they will get 0.5 per cent, for seven years it will be 0.7 per cent, and for 10 years it will be 1 per cent of the amount invested. For senior citizens, there is an additional interest of 0.10 per cent. There is a MIBOR (Mumbai Inter-Bank Offered Rate)-linked instrument as well in this offering. It is a floating rate instrument with a spread of 2.16 per cent over the overnight MIBOR.

This year, we have projected a 20 per cent growth in incremental disbursement over last year. So, we have a ₹4,000-4,500-crore monthly disbursement run rate. Last year, we did about ₹45,000-crore disbursements.

The RBI rationalised and liberalised the ECB policy last month and we are positive. Obviously, it caps us (HFCs) at $750 million per institution. But yes, this $750 million can be raised either through bonds or loans. So, that option is available to us. At the end of the day, the sources of raising funds are pretty well-defined. We don’t have the advantage of a repo window or accepting CASA (current account, savings account) money.

We accept fixed deposits (FDs) with minimum one-year tenure. We hope this minimum one-year tenure comes down to 15 days, 30 days, just like how it is for the banking system. We also maintain 12.5 per cent SLR (statutory liquidity ratio) on the deposits raised. So, just to accept shorter duration, why should I become a bank when most of my lending is towards the priority sector. This relaxation is a long-standing demand from our end with the National Housing Bank and the Reserve Bank of India. And rightly so, because our asset class is better proven than any other in the industry. We have a better handle on our ALM (asset-liability management), compared to many others out there. At the same time we are AAA-rated by the rating agencies.

There is a strong treasury management focus. So, keeping all these in mind, the relaxation on FD tenure is long-pending, and should be considered positively by the regulators.

Today, there are many new participants in the market. There are about 94 NHB-registered HFCs. There are about 15-20 more in the pipeline. Going forward, only the fittest will survive. The biggest thing, in my view, is not about the asset that you generate in the balance sheet that is important – it is about how you generate liability and at the right cost.

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