Sundaram Home Finance Knocks ADB For Rs 100-crore Credit Line

Chennai, December 22: | Updated: Dec 23 2002, 05:30am hrs
The Chennai-based Sundaram Home Finance Ltd (SHFL) has initiated dialogues with the multilateral lending agency, Asian Development Bank (ADB), for opening a Rs 100 crore credit line. The home loan company would use the funds to boost its topline to Rs 500 crore during the next financial year.

Mr Nitin Palany, managing director of the company told FE: We are seeking Rs 100 crore loan from ADB for funding our growth plans. The company has just placed its proposal with the bank and it will take sometime to get through.

In fact, we have not decided on the exact structure of the loan. However, SHFL is looking at a loan with a longer tenor, say 15 years. We will look for a rupee loan option in the ADB proposal to protect ourselves from the fluctuations in the economy. The company is looking at an ambitious target of Rs 500-crore of housing loan approvals during the financial year ending March 2004 as against the current years target of Rs 350 crore. In SHFL, we believe in having proper mix of funds to avoid asset liability mismatch. The company looks at newer avenues to raise funds for meeting its future disbursement requirements. Of our total resources, only 20 per cent is from deposits which account for nearly Rs 45 crore and the balance is from other term loans, he said. The company has recently availed an eight year, Rs 25 crore line of credit from International Finance Corporation (IFC), Washington at the rate of 7.25 per cent. The paid-up capital of the company is Rs 50 crore of which nearly 65 per cent is held by Sundaram Finance Ltd, 20 per cent by IFC and the balance 15 per cent by FMO, Netherlands.

Mr Palany said, the company is also looking at securitisation as one of the avenues to raise resources. We are planning to securitise housing finance receivables to the tune of Rs 25 crore by the end of this financial year. The deal being planned will be without recourse and is expected to happen during January-March 2003. We might also come out with a 7-8 year paper of Rs 25 crore during the same period depending on the market conditions, he said.