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LIC Housing Finance plans to launch Rs 500-cr fund in Sept

BS Reporter  |  Chennai 

LIC Housing Ltd plans to launch a Rs 500-crore venture capital (VC) fund for urban infrastructure development by September, according to its director and chief executive officer, V K Sharma.

Speaking to reporters on the sidelines of the company’s property exhibition here today, he said LIC Housing had already started the process for launching the fund. The company is also planning to launch a pure fixed rate housing loan product.

LIC Housing would raise interest rates if the Reserve Bank of India (RBI) increases its key policy rates. “The increase in interest rates is squeezing our margin. We did not increase the rates when the central bank revised these last time. We are waiting for the RBI guidance and if the rates are increased again, we also have to go for a rate hike,” said Sharma. It had increased its interest rates by 25 basis points twice in the recent past, in March and June, following the interest rate hikes by RBI.

Sharma said there would not be more than two upward revision in interest rates in future. However, he expressed hopes that the rates would come down after that.

The current interest rate of LIC Housing Finance is around 10.15 per cent for loans up to Rs 20 lakh and around 10.75 per cent for loans above that, on floating rate basis.

The company is expecting a net interest margin of 2.7-2.8 per cent this financial year. It has a nine per cent market share in the country’s housing finance business and is expecting a 25 per cent overall growth this financial year. It is also looking at a loan disbursement of Rs 5,500 crore in southern states, compared to Rs 4,125 crore in the previous financial year, according to Sharma.

First Published: Sat, July 16 2011. 00:51 IST