Says LIC Housing Finance's managing director YP Gupta: "The company will only act as a distributor of insurance products. This will be a non-fund-based activity for the company. The company can sell the policies to its clients and earn the commission instead of passing it over to someone else."

The average cost of borrowings of the company has come down to 12.88 per cent in the fiscal 2000 from 13 per cent in the preceding fiscal. Gupta added the company will also repay some of its high-cost loans, which it had taken on during the pervious years.

Margins, said Gupta, have fallen to 2.19 per cent in the fiscal 2000 from 2.64 per cent in the preceding fiscal. The company, at present, gets its long-term finances from LIC. It is in negotiations with Asian Development Bank (ADB) to raise long-term finances.

LIC Housinghas scaled down its growth rate for the current fiscal to 28 per cent in disbursements and 25 per cent in sanctions compared to a growth rate of 36 per cent in disbursement and 31 per cent in sanctions in the fiscal 2000.

LIC Housing is planning to enter into a mortgage-backed securitisation deal - similar to an offering by HDFC - approved by National Housing Bank (NHB) of Rs 50 crore. The issue, which has been rated by Crisil as `AAA(SO'), will hit the market in July. SBI Caps is the lead manager to the issue.