Mortgage guarantee firm to be operational by year end: NHB

Source: livemint:PTI:sep 19,2011

The firm is being set up to compensate banks and housing finance companies (HFCs) in case of defaults by home loan borrowers

New Delhi: Housing finance watchdog National Housing Bank (NHB) on Monday said the proposed mortgage guarantee company is expected to be operational by the end of the current fiscal.


“We hope that the mortgage guarantee company will begin its operation by the end of the current fiscal or early next fiscal,” NHB chairman and managing director R V Verma said after announcing the 2010-11 financial numbers here.


The firm is being set up to compensate banks and housing finance companies (HFCs) in case of defaults by home loan borrowers.


NHB has finalised partners for the mortgage guarantee company. NHB will be the lead partner with 38% stake while Asian Development Bank (ADB) and International Finance Corporation (IFC) will have 13% stake each in the company, he said. Remaining 36% stake will be with a US-based mortgage company, Verma said.


Declining to name the US-based partner, he said the company will be set up with the paid-up capital of Rs. 120 crore.


NHB expects Foreign Investment Promotion Board’s (FIPB) clearance by the end of December and thereafter it will apply to RBI for regulatory approval by January, he said.
Besides, the regulator is planning to set up credit enhancement company during the current fiscal.


NHB is examining model for setting up credit enhancement company, Verma said.


NHB posted a marginal decline in net profit at Rs. 279 crore for the financial year ended June 2011. The net profit of the apex housing finance institution stood at Rs. 280 crore in the previous fiscal.


However, NHB maintained 100% collection efficiency during the year, with ‘Nil´ gross NPAs and net NPAs.


The bank made a total loan disbursement of Rs. 12,035 crore, out of which rural housing had the share of 48%, amounting to Rs. 5,789 crore, he said.


Refinance disbursements during the year under review had an average loan size of Rs. 4.36 lakh per unit, he added.