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.