State Bank of India (SBI), country’s largest lender has decided to increase loan limit by ten-fold given to individuals who plan to buy land to build a house as bank moves forward into the housing segment.
As per the new proposal the bank will be lending Rs 10 crore for buying land for housing against the earlier cap of Rs 1 crore, informed a senior SBI official. The bank has also done modification in the norms pertaining to the construction period if the project is undertaken by government agencies. At present a project must be completed within two years.
A senior SBI official said, “A customer will also be eligible to avail another housing loan for other housing-related construction on that plot, enjoying the benefit of running both the loans concurrently.”
Moreover bank has set the margin money limit – the amount a customer has to pay upfront for availing a loan — at nearly 35% for loans above Rs 1 crore.
For loans up to Rs 75 lakh, bank has fixed the margin money at 20%. It is believed bank’s latest move to push ahead its housing sector shows its troubles with excess liquidity and a tepid credit offtake.
“We have a liquidity of over Rs 40,000 crore; schemes such as this will help us achieve our credit growth targets,” the official said.
The bank has set a target of increasing its credit growth by around 22%. Last year, the RBI had revised the credit growth target for commercial banks, the money they lend to customers, to 16% from 18%.
SBI has already started pushing forward its housing sector recently it extended its popular 8% home loan scheme, or teaser loans, until June 30.
It is also trying to work out other avenues to increase the credit offtake, though it will take steps to see that the due diligence process doesn’t suffer.
“To minimize fraud risk, two title search reports from different lawyers will be obtained before sanctioning the loan,” the official said.
It is believed this sharp increase in the loan amount will boost the real sector, which is at present, in spite of the return of buyers, is suffering from a big drop in the banking credit. According to RBI figures, for the 11 months to end February loans to the realty sector had decreased by 97% to Rs 842 crore as against Rs 33,617 from a year ago.
“Schemes such as this will indirectly ensure credit flow to these companies,” said a senior official of a real estate company.
Friday, May 21, 2010
Wednesday, May 5, 2010
LIC Housing Finance, a subsidiary of Life Insurance Corporation of India (LIC), will be applying for a banking license if it fulfills the conditions laid down by Reserve Bank of India (RBI) in its guidelines for fresh licenses for private sector companies. If its not possible to venture into banking with its parent company, LIC, the home loan company will continue with its plans of foraying into banking if it qualifies the proposed RBI guidelines.
R R Nair, director and chief executive officer of LIC Housing Finance, said in a press conference called to announce the company’s fourth quarter results, “We are interested in applying for a banking license. LIC may or may not be part of the venture because it is a public sector organization and has its own regulations to follow. We have not initiated any talks with RBI. We are waiting for the guidelines from the central bank.”
In the next six months company will also launch its real estate venture capital fund with an initial seed capital of Rs 500 crore. Nair said, “About 20 per cent of the capital will be from LIC and the housing finance company and the remaining would be mobilized from HNIs (high net worth individuals) and institutions.” Earlier company had planned to get into joint venture for this but it has changed its mind. Now it will be a subsidiary whereas LIC and the home finance company will be major shareholders. It will be investing in real estate projects in residential and commercial areas.
In Financial Chronicle it was first reported that LIC and LIC Housing Finance will start a real estate fund with a corpus of Rs 500 crore.
The company is also looking to raise Rs 20,000 crore during the financial year through non-convertible debentures and public deposits.
However in 2009-10 company share of home loans have increased by 12 per cent as against 6 per cent in 2008-09. The company offers special home loan rate of 8.9 per cent fixed for three years and a 8.75 per cent floating rate. By the end of fiscal year in March 2010, the company had approved Rs 18,043 crore of loans to individuals and real estate developers and disbursed Rs 14,853 crore. Out of this, company sanctioned about Rs 14,151 crore home loans and disbursed amount was Rs 12,448 crore. The company registered a 36 per cent year-on-year rise in net profit to Rs 213.51 crore in 2009-10.
R R Nair, director and chief executive officer of LIC Housing Finance, said in a press conference called to announce the company’s fourth quarter results, “We are interested in applying for a banking license. LIC may or may not be part of the venture because it is a public sector organization and has its own regulations to follow. We have not initiated any talks with RBI. We are waiting for the guidelines from the central bank.”
In the next six months company will also launch its real estate venture capital fund with an initial seed capital of Rs 500 crore. Nair said, “About 20 per cent of the capital will be from LIC and the housing finance company and the remaining would be mobilized from HNIs (high net worth individuals) and institutions.” Earlier company had planned to get into joint venture for this but it has changed its mind. Now it will be a subsidiary whereas LIC and the home finance company will be major shareholders. It will be investing in real estate projects in residential and commercial areas.
In Financial Chronicle it was first reported that LIC and LIC Housing Finance will start a real estate fund with a corpus of Rs 500 crore.
The company is also looking to raise Rs 20,000 crore during the financial year through non-convertible debentures and public deposits.
However in 2009-10 company share of home loans have increased by 12 per cent as against 6 per cent in 2008-09. The company offers special home loan rate of 8.9 per cent fixed for three years and a 8.75 per cent floating rate. By the end of fiscal year in March 2010, the company had approved Rs 18,043 crore of loans to individuals and real estate developers and disbursed Rs 14,853 crore. Out of this, company sanctioned about Rs 14,151 crore home loans and disbursed amount was Rs 12,448 crore. The company registered a 36 per cent year-on-year rise in net profit to Rs 213.51 crore in 2009-10.
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