LIC Housing Finance sees developer loan portfolio slipping
Accordingly, the mortgage arm of the life insurance giant LIC is exploring other options like reducing the composition of bank borrowings and increasing borrowing through debentures to meet its margin guidance of 2.5-2.7 per cent, a top company official has said.
"At this stage, the market is very disturbed. The primary reason is not that demand is not there, but bank approvals are not coming in, funding is not happening. My funding will not help them alone," LICHFL Director and Chief Executive V K Sharma said, explaining what is keeping developers off.
Following adoption of standard operating procedures in the wake of its previous chief executive getting caught in the cash-for-loans scam, the company has also stayed away from giving term loans to developers and is offering construction finance which is linked to the progress of the projects, Sharma said.
Additionally, the lower lending, which the company started giving in the wake of the scam, has also been promptly repaid by borrowers, reducing the outstanding portfolio, he said. The developer segment constitutes about 3 per cent of the total assets of over Rs 69,000 crore for the mortgage player. Saddled with low margins of under 2.20 per cent, the company has
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