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| Sunday, 09 March 2003 |
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HDFC moves into banking sector by SUREKHA GALAGODA The Housing Development Finance Corporation (HDFC), which has been approved as a Licensed Specialised Housing Bank, will expand its scope of activities to mobilise savings, finance property developers and increase its market share in housing. HDFC will change its name to HDFC Bank within the next two weeks, in line with its new status, said CEO and General Manager HDFC C.A. Sarathchandra. The main objective of converting HDFC into a Licensed Specialised Housing Bank is to develop its lending capacity and attract long-term institutional savings. This will permit HDFC to play a major role in the housing finance sector for the benefit of homeless people in the country. Sarathchandra said: "At present, we give housing loans only to individuals, but once we set up the projects department for evaluation of corporate credit facilities, we will be able to provide loans to corporates as well. I am hopeful of being able to provide loans to the corporate sector within the next three months. "Under the new provisions of financing corporates, we will finance property developers to construct condominiums as well as housing projects. This step will boost the construction industry and help property developers expand their businesses while providing housing to Sri Lankans." HDFC's interest rates for loans to the corporate sector will be lower than the market rate as its main aim is to provide housing for the homeless in the country. The present interest rates for HDFC's loans are 10.5 per cent for low income and 15 per cent for middle and wider income group individuals. "The maximum amount given as loans may even be Rs 100 million, but we have not decided on that issue as we have to consult the Central Bank. The maximum amount given as a loan is five million rupees at present, but is negotiable on the borrower's requirements," he said. Sarathchandra said they are planning to introduce savings schemes for schoolchildren and young adults as this will not only inculcate the savings habit among children, but also provide long-term funds needed for the development of the economy as increased savings result in improved economic conditions in the country. "Our present savings ratio is 17 per cent while it is as high as 30 per cent in countries such as Hong Kong and Singapore," he added. HDFC is also planning to formulate new subsidiary companies to take up housing construction projects. The Government has appointed HDFC as the apex organisation to implement the recently introduced Government's Affordable Housing Finance Scheme to provide affordable housing loans for lower and middle income families. The Corporation will continue to play a major role in the debt capital market by issuing further mortgage securitisation issues. The first such issue was successfully launched. Sarathchandra said the organisation will be fully automated during the year which will enable them to introduce new housing loan products to suit clients' needs. HDFC was established on July 1, 2000 to replace the Housing Development Finance Limited of Sri Lanka, which was a building society established under the National Housing Act of 1984. |
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