NHB aims to raise Rs 3,250 crore from retail investors by June

National Housing Bank, the housing finance regulator and refinancer, on Thursday announced it has started resource mobilisation from individuals and institutions other than banks. Till now, it was engaged only in the wholesale business of borrowing and lending for housing finance. The company targets raising Rs 3,250 crore from retail investors by June, 2009.

The three products include two fixed deposit products and one zero coupon bond, which is sold at a huge discount to the face value but the buyer gets the face value on maturity.

NHB Sunidhi Term Deposit Scheme and NHB Suvriddhi (Tax Saving) Term Deposit Scheme are the fixed deposit schemes, while the third product is NHB Sumeru Zero Coupon Bond. Having to fund its operations through short term sources like refinance window of Reserve Bank of India and loans from banks, NHB is looking to garner long-term funds through the products. The RBI refinance facility worth Rs 4,000 crore is available only till March 31.

?We have found that the wholesale investors fiddle and hence we are also focusing on retail depositors. Retail deposits would not make a huge share but still be something we are committed to. We will use this money to finance housing,? the bank?s chairman and managing director S Sridhar told reporters here. ?Banks don?t have long-term sources of funds and we want to provide them long-term and stable sources of funds,? he added.

In order to garner the targeted funds, the bank is paying interest rates of 8.75-9.25% on fixed deposit for 12 months, higher than some of the commercial banks. ?We want to garner a high retail customer base and have deliberately kept the interest rate at this level. Till June, we want to raise Rs 250 crore through the deposit schemes,? Sridhar said. NHB said it will refinance Rs 15,000 crore this fiscal, which ends on June 30, 2009 for the company. ?Till now we have used Rs 1,100 out of the Rs 4,000 crore refinance facility extended by RBI in December. In total, we have refinanced Rs 11,000 crore this year as of now and would refinance Rs 15,000 crore by the end of the year,? Sridhar said.

NHB said it is collecting information from housing finance companies (HFCs) about their exposure in group entities of the tainted Satyam Computer Services. ?We are collecting information from HFCs about their exposure in all group companies of Satyam. The information would be shared at an appropriate time,? Sridhar said. In the NHB Sunidhi Term Deposit Scheme, which is open for resident Indian individuals, hindu undivided families, societies and trusts, partnership firms and association of persons, pays interest at 9.25% for maturity of one and two years. On deposits for three and five years, the interest would be 9%.

NBH Suvriddhi, which has a lock-in period of five years, gives tax exemption under sector 80C to the depositors and carries interest rate of 8.75%. For senior citizens interest rate is higher by 50 basis points in both the schemes.