Gujarat Slashes Stamp Duty On Housing Loans
Gujarat has become the fourth state in the country to reduce the stamp duty on mortgage-backed securitisation of housing loans_-a move housing finance officials hoped would give a fillip to securitisation deals in the state and have a demonstration effect on the other states.
National Housing Bank (NHB) officials yesterday confirmed the receipt of the notification from the Gujarat government on the cut in the stamp duty on mortgage securitisation from ad valorem to 0.1 per cent. Maharashtra, Tamil Nadu and Karnataka had earlier similarly reduced their stamp duties to 0.1 per cent.
"Until now the securitisation deals were hampered by the high stamp duties, because the person who buys the loan had to pay the stamp duty, and because the duty was high the yields that he realised were low," officials explained.
"Because of the lower stamp duty in Gujarat, the housing loans extended in the state would get recycled (through more securitisation deals) and invested back in the state's economy," officials said.
Also, the state housing development corporations would be tempted to enter into securitisation deals," the officials added.
Tamil Nadu has seen one of the maximum number of securitisation deals in the country mainly because of the low stamp duties existing in the state. "Most companies planning securitisation, used to get themselved registered in Tamil Nadu," sources said.
Meanwhile, the National Housing Bank (NHB) is all set to conclude its first pilot project to securitise the assets of four housing finance companies_-Housing Development Finance Corporation (HDFC), LIC Housing Finance, Can Fin Homes and Dewan Housing Finance, valued at Rs 115 crore.
NHB would issues "pass though certificates" for securitising mortgage-backed securities and had planned to initially sell the assets in Maharashtra, Karnataka and Tamil Nadu.
Sources said the NHB has received all legal documents and the merchant bankers_-I-sec and SBI Caps are finalising the offer documents for the securitisation deal.