Housing bank expects finance firms to reduce rates

December 30th, 2008 - 4:46 pm ICT by IANS  

Kolkata, Dec 30 (IANS) India’s apex housing finance institution, the National Housing Bank (NHB), expects housing finance companies to reduce lending rates, a top company official said here Tuesday.”As we have reduced rates, we expect housing finance companies to reduce rates and pass on the benefits to consumers,” NHB chairman and managing director S. Sridhar told reporters on the sidelines of a workshop on reverse mortgage.

Sridhar agreed that some housing finance companies have already reduced rates by 50-75 basis points.

Dwelling on refinance rates, he said these varied depending on the schemes, and added: “At present, it is available at 8 percent for the weaker sections or rural housing while other refinance rates vary from 9-9.75 percent depending on the period and borrowing institutions.”

NHB has reduced its prime lending rate (PLR) from 11.25 percent to 10.75 percent; it reduced its refinance rates earlier.

Asked whether the bank has plans to raise any fund from market, Sridhar said: “Depending on the demand, we will plan to raise funds from the market. We have a plan to raise Rs.3,000 crore (Rs.30 billion) by June 2009, mainly through bonds.”

In the first half of the current fiscal, NHB has raised Rs.78 billion (Rs.7,800 crore).

The central Reserve Bank of India (RBI) Dec 11 had given a refinance boost of Rs.40 billion (Rs.4,000 crore) to the NHB. It will be available at an interest rate of 8 percent, and will be available only for loans below Rs.2 million (Rs.20 lakh).

NHB, which is wholly-owned by RBI, does not have any plan of overseas borrowing in the current financial year, Sridhar said.

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