NHB to set up a mortgage guarantee company

Sources from the bank indicated that, NHB would be holding 43 per cent stake in the mortgage guarantee company.

"United Guarantee Company would be holding 41 per cent of the stake with the other two partners, ADB and IFC holding 8 per cent each," the source added.

While speaking with the media in the sidelines of Banking Conclave 2008, organised by FICCI, NHB Chairman S Shridhar said, "The company will be floated in the next three to four months with United Guaranty Corp, International Finance Corporation and Asian Development Bank taking minority stakes. We are going to be the majority stake holder but our holding will be less than 51 per cent since we would like to keep the company private."

 

According to him the rationale behind setting up this company lies in the fact that it would help the banks with a degree of protection against defaulters, which would in turn increase flow of bank credit in the housing sector.

Without divulging any details about the paid up capital of the company, he added, "The paid up capital would be substantially higher than Rs 100 crore, the minimum capital required to set up a joint venture company, as par the Reserve Bank of India (RBI) guidelines."

Meanwhile, commenting about the capital raising plans, Shridhar said, the bank aims to raise Rs 11,000 crore for the current fiscal.

Of this Rs 3000 crore would be raised through the zero- coupon bonds, which the bank is planning to issue shortly.

Apart from this NHB is awaiting for the RBI approval for launching retail deposits like 5 years public deposits scheme with 18c tax concession and below five years taxable deposits.

 "We are aiming to mop up Rs 1,000 crore through retail deposits," Shridhar added.