Hdfc To Allow Fiis To Hold Up To 30%

The Housing Development Finance Corporation (HDFC) has decided to increase the investment limit of foreign institutional investors (FIIs) in the corporation to 30 per cent from 24 per cent. It has also decided to hike its borrowings limit from Rs 7,500 crore to Rs 12,500 crore.

FIIs have been asking HDFC to increase their investment limit from 24 per cent as they, along with overseas corporate bodies and non-resident Indians, hold 23.77 per cent of the housing finance corporation.

The move to increase the investment limit will result in the corporation's stock price moving up on the bourses as the FII demand will crystallise. Yesterday, the Housing Development Finance Corporation scrip opened at Rs 3,401, rose to Rs 3,450 and closed at Rs 3,439.

 

"Several FIIs have expressed their desire to acquire the corporation's shares and are currently not able to do so due to the 24 per cent limit," said officials at HDFC.

In order to increase the limit, the corporation is moving a special resolution at its AGM on June 24. However, no single FII will have a stake of more than 10 per cent.

HDFC has also nearly touched the present limit of Rs 7,500 crore for borrowings and hence plans to increase it to Rs 12,500 crore.

The Rs 7,500-crore limit was fixed in 1994 and as on March 31 the total borrowings of the corporation amounted to Rs 6,537.66 crore.

The notice for the AGM states, "In view of the corporation's increasing actitivites it may be necessary for it to borrow money from various sources, which would exceed the present limit of Rs 7,500 crore."

Sources say that HDFC might raise a major chunk of the increased borrowings through fixed deposits.

The corporation has an agents network of over 42,000 to mobilise deposits. Its deposits grew to Rs 3,502 crore as on March 31, 1997, an increase of Rs 989 crore, from Rs 2,513 crore in the corresponding period of the previous year. The depositor-base increased from 5.17 lakh to 8.67 lakh.

The rise in borrowings is necessary due to the rapid rise in the business of HDFC. For instance, loan approvals and disbursements in 1996-97 were Rs 2,521 crore and Rs 2,100 crore respectively.

As against this, the repayments during the year stood at Rs 1,132 crore, up from Rs 690 crore the previous year. The increasing business hence requires aggressive borrowings by HDFC, says an analyst.

The profit before tax of HDFC was Rs 312.88 crore as on March 31, 1997, up from Rs 245.88 crore the previous year. After making a provision for tax at Rs 65 crore (Rs 50 crore) the net profit stood at Rs 247.88 crore (Rs 195.68 crore).