Nhb-Fi Meet On Sbi Home Recapitalisation Today

The fate of the beleaguered SBI Home Finance Ltd will be decided at a meeting called by the National Housing Bank (NHB) of financial institutions today.

NHB, the housing finance sector regulator, is at present weighing options to recapitalise the housing finance outfit. The financial institutions -- Housing Development Finance Corporation (HDFC), Unit Trust of India (UTI), Life Insurance Corporation of India (LIC), and General Insurance Corporation of India (GIC) -- had jointly floated SBI Home Finance in 1993 when the government wanted to open up housing finance as a sector.

The NHB initiative to revive the housing finance company is significant as earlier this year the promoters of the company had adopted a special resolution at an extraordinary general meeting to infuse fresh capital though the preference issue route. The idea was to jack up the equity base from Rs 40 crore to Rs 100 crore.

 

Post-issue, the State Bank of India's (SBI) stake would have gone up from 26 per cent to 85.5 per cent. Other institutions' stake may also have declined.

HDFC's equity holding would have fallen from 14 per cent to 2.1 per cent, UTI's from 7.87 per cent to 4.58 per cent, and the joint holding of LIC and GIC would have slipped to 1.49 per cent from 9.92 per cent. Public holding would have equally fallen drastically from 42.21 per cent to 6.33 per cent.

For the year ended March 31, 2001, the housing finance company's net loss stood at Rs 21.7 crore compared with a net loss of Rs 24.53 crore in the previous fiscal.

The accumulated losses of Rs 60.65 crore in March 2000 wiped out the Rs 17.76 crore net worth of the outfit. SBI Home requires fundings worth Rs 100 crore to recapitalise its operations following losses in the past couple of years.

SBI Home has been surviving through a line of credit from its parent body SBI, which sanctioned Rs 200 crore in January this year and Rs 210 crore in March last year.

SBI Home has huge non-performing assets brought about not through housing loans, but through non-housing activities including leasing, bill discounting and development funding, said industry sources.

Many financial institutions are not keen to invest further funds in SBI Home. Industry sources further added that should HDFC make additional investment to help recapitalise the SBI-affiliated outfit, it would impact its capital adequacy ratio which is currently at 12.7 per cent.