Nhb Pares Refin Rates By 50 Bp

The National Housing Bank (NHB) has cut its refinance rates by 50 basis points. The move comes in the wake of the recent 50 basis point cut in bank rate and the 200 basis points cut in cash reserve ratio by the Reserve Bank of India (RBI).

While the interest rate has come down from 11.25 per cent to 10.75 per cent for loans between Rs 2 lakh and Rs 15 lakh, it has been reduced from 11.25 per cent to 10.5 per cent for loans between Rs 1 lakh and Rs 2 lakh. A new slab -- Rs 15-20 lakh -- has been introduced with an interest rate of 11 per cent.

In order to give a special thrust to housing finance in rural areas, NHB has cut refinance rates by 175 basis points for loans up to Rs 2 lakh. The rates have come down from 10.75 per cent to 9 per cent for this slab.

"The refinance rate cut will increase spreads for housing finance companies. It will help them achieve a greater market penetration and shore up the capacity of particularly small and medium-sized housing finance companies (HFC) to access long term funds," NHB's executive director R V Verma said.

NHB had earlier come under fire from various housing finance companies because it reacted much after the RBI announced a cut in bank rate. HFCs have held the view that because of the late reaction from NHB, they lost a considerable market share to the commercial banks which were aggressively eyeing the housing finance sector.

The decision to reduce refinance rate was taken at a board meeting held on October 29 to approve the balance sheet of the apex housing finance regulator.

NHB has registered a 19 per cent growth in its annual disbursements in 2000-2001 ending June. The annual disbursements during last financial year were at Rs 1,003 crore compared with Rs 841.68 crore during 1999-2000 and Rs 445 crore during 1996-97.

NHB also clocked an all-time high gross profit of Rs 103 crore during the last financial year compared with Rs 84 crore during 1999-2000. Outstanding refinance for 2000-2001 registered a 24 per cent increase and touched Rs 4,351 crore against Rs 3,678 crore during 1999-2000.

NHB had no non-performing assets during the last financial year and its capital adequacy ratio was at 16.83 per cent. Net worth -- share capital and reserves -- of NHB increased by 52 per cent since 1996-97 from Rs 672 crore to Rs 1022 crore in 2000-2001.