Page 16 - Banking Finance April 2019

HOUSING

LIC Housing Finance Limited to offer home loans up to
IFC to offer $125 mn in
75 years
debt funding to L&T Fi-
LIC Housing Finance (LICHFL) is now offering home loans that can be repaid up
to the age of 75. This follows a partnership between nance
the housing finance company and India Mortgage
Guarantee Corporation (IMGC), which provides insur-
ance against defaults. Speaking to TOI, LICHFL MD
& CEO Vinay Sah said that the partnership with IMGC
would enable the housing finance firm to provide
long-term loans to borrowers who are not salaried.
"It will also enable us to provide mortgages with higher loan-to-value ratios."
For the payment of a small premium, the IMGC will guarantee repayment of
20% of the outstanding loan. At the least, it will be enough to cover six EMIs. International Finance Corporation
This will give enough time to the lender to realise value from the house without plans to provide Rs 900 crore ($125
losing any money. The one-time premium will range from 0.9% to 1.5% of the million) to L&T Finance Ltd to help
loan and will have to be borne by the borrower and adjusted in the EMI. Ac- the non-bank lender expand its farm
cording to Sah, LICHFL will be able to increase market penetration as it will be equipment financing portfolio.
able to accommodate more borrowers and ease restrictions on profile of appli-
IFC will offer the funding through
cants, who face rejection related to work profile, workplace and credit history,
among other reasons that may be unspecified by lending institutions. five-year senior, secured debt, the
World Bank's private-sector invest-
ment arm said in a disclosure.
Tata Capital Housing Finance looking to raise $100 mil-
L&T Finance will match IFC's invest-
lion via ECB ment by contributing up to $375 mil-
Tata Capital will be raising $100 million in foreign borrowings through an arm lion for farm equipment financing. At
soon, a top official has said. The external commer- least 60% of the combined fund will
cial borrowing (ECB) being raised by Tata Capital be used for lending in the low-income
Housing Finance is part of a liabilities diversification
states of India, IFC said.
programme, Tata Capital managing director and
chief executive Rajiv Sabharwal said. "We will do a The World Bank arm said it may also
borrowing of $100 million before the end of the fis- mobilise additional funding from
cal year," Sabharwal told recently. other investors for the project.
The ECB funds will come right after a Rs 2,500-crore capital infusion by the par- IFC said that this debt funding was
ent Tata Sons in two tranches through the course of the fiscal, he said. part of its measures "in response to
Sabharwal said as part of liability diversification, the company also completed the recent liquidity shortage" that
its maiden non-convertible debenture issue last September, raising Rs 1,400 NBFCs in India had been facing.
crore. The firm has provided debt funding
Asked if the liability diversification is the result of the squeeze in credit markets to other non-bank lenders also re-
after the IL&FS crisis, he replied in the negative, stating that the company had cently. Last month, it proposed to
already drawn up plans to diversify its borrowing sources. The company is tar- make a debt investment of $150
geting 25-30 per cent credit growth for FY20 and he hinted that this capital million (Rs 1,068 crore) in non-bank-
raised will suffice for at least one year given the credit growthtarget. ing finance firm Bajaj Finance Ltd.
At present, 60 per cent of its book is devoted to the retail segment, 25 per cent IFC's other recent debt investments
to small and medium enterprises while corporate and infrastructure account include putting $50 million (Rs 350
for the remaining 15 per cent, Sabharwal said, pointing out that broadly, the crore) into Ujjivan Small Finance
book composition will be maintained. Bank in November 2018.

16 | 2019 | APRIL | BANKING FINANCE