Govt Asks Hudco To Slash Home Loan Interest Rates

New Delhi, Sept 26: | Updated: Sep 27 2003, 05:30am hrs
Union minister of state Bandaru Dattatreya has asked Housing and Urban Development Corporation (Hudco) to cut down its lending rates in view of competition from other players. But Hudcos cost of funds leaves very little scope for it to lower interest rates.

Addressing a press conference after taking a review meeting of Hudcos operations, the minister said, I have asked Hudco to revise its interest rates on housing loans and also to relax procedures for getting loans.

He said while the market rates hovered around 9 per cent, Hudco charged 9.5 per cent to 10.5 per cent interest on loans depending upon different slabs.

Asked why the rates were high compared to the rates prevalent in the market, senior executive director PS Rana said Hudcos borrowing rate was very high while banks had access to cheap funds.

Dr Rana said while the average cost of borrowings for Hudco was 7-8 per cent, the average historical cost of loan taken during the higher interest rate regime was 10 per cent. Hudco had a margin of 0.5 per cent.

Hudco officials on their part said a meeting of the board of directors of the company would be held soon to consider the issue. The minister said that Hudcos profit rose from Rs 114 crore last financial year to Rs 266 crore this year, showing a jump of 134 per cent. The net worth of the company also increased from Rs 2,955 crore to Rs 3,098 crore. It declared a dividend of Rs 53 crore to the government.