LICHF to raise Rs 5,600 cr this fiscal

MUMBAI: LIC Housing Finance Limited (LICHF) plans to raise Rs 5,600 crore this year, significantly higher than the Rs 4,200 crore it raised last year for which purpose it is mulling the option of mobilising public deposits for the first time.

"Plans to raise public deposits are being fine-tuned and we will announce our plans in this regard soon," S K Mitter, Director & Chief Executive, LICHF, told reporters here today.

While the timeframe for this has not yet been finalised, it is expected that the housing finance major will begin this exercise in Q3 FY 07. The other options for raising finance include bonds, NHB refinance and even a FCCB, if found feasible, Mitter said.

A top LICHF official, however, told PTI that the FCCB option is not an attractive one presently given that the dollar has depreciated.

Raising public deposits will enable the company to not only have a new source of funds but will also enable it raise funds at low rates. The deposits will have a tenure of 3-to-5- years.

Similarly, with a view to cushioning itself against falling margins, LICHF has diversified into the assisted living homes segment with a pilot project in Bangalore. Targeted at senior citizens, the total investment in the Bangalore project was around Rs 6-crore.

The company is now setting up a project in Orissa and soon plans to enter other places such as Kochi, Bhubhaneshwar, Kolkata, Haridwar, Delhi, etc. "We plan to set up two projects every year over the next three years," Mitter said.

This business will be conducted by its wholly-owned subsidiary LICHF Care Homes Limited.

Mitter said that the plan this year was to grow business by at least 20 per cent and a new target segment this year would be the high net worth individuals. "Presently our average loan size is around Rs 6-lakh, which, in 2-3 years, we want to raise to Rs 10-11 lakh," he said.

More focus will be given to Tier II towns even as the company will increase the number of its home loan agents and direct selling agents which presently number around 5,000 and 300 respectively.

On operating its own real estate mutual fund, Mitter said that this would take time as "we want to first gain experience in this field." LICHF has contributed Rs 50-crore to Kotak's India Realty Fund and Rs 10-crore to Unitech's CIG Realty Fund.

On a possible interest rate hike, Mitter said that a review would be held on July 1 and a decision on the matter taken then. LICHF's floating interest rates now stand at between 8.75-9.5 per cent while the fixed rates are between 9.5-10.5 per cent.