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HUDCO cuts rates from today; sanctions cross a record Rs 89 billion

Interest rates on loans from the Housing and Urban Development Corporation, or HUDCO, have been reduced from today due to withdrawal of interest tax as per Finance Bill 2000.

Also, the maximum loan ceiling has been raised to Rs 5 million from half of that earlier, the loan slabs have been reduced to three from six earlier and processing fee reduced.

HUDCO chairman and managing director V Suresh said the reduction in interest rate is 0.25 to 1.25 per cent depending on the loan amount.

''Due to reduction in borrowing cost through innovative resource mobilisation, the corporation has decided to rationalise its interest rates and loan slabs further in order to make HUDCO Niwas Retail Lending Scheme more affordable.''

The scheme introduced a year ago has received overwhelming response, he said. HUDCO Niwas has sanctioned more than Rs 12.51 billion for 18 million applicants across the country and released over Rs 8.04 billion in first year of operation beginning March 1999.

The scheme will now charge 11.50 per cent interest rate for loans up to Rs 50,000, 12.75 per cent for loans between Rs 50,000 to Rs 200,000 and 13.50 per cent for loans ranging between Rs 200,000 to Rs 5 million.

The overall saving to a borrower following these reductions will range between 5 to 15 per cent of the loan amount, depending upon the amount and period. For example, on a loan of Rs 100,000 with a maturity of 15 years, a borrower will save up to Rs 15,149.

Thus, the overall benefit available to HUDCO Niwas applicants varies from Rs 13,000 to Rs 52,000.

At the same time, Suresh said, the benefit given in the form of free insurance policy for the house and personal accident cover for the applicant and waiver of last two equated monthly instalments makes HUDCO Niwas attractive and competitive.

Elaborating on HUDCO's yearly performance, Suresh said the corporation achieved all-time high sanctions of Rs 89 billion, marking a jump of 33.5 per cent during 1999-2000 over last year's performance of Rs 67 billion.

It provided assistance for construction of 1.63 million dwelling units and over 1,80,000 sanitation units besides taking up 86 urban infrastructure projects.

The loan released during the year totalled Rs 43.18 billion, up 35 per cent over Rs 32 billion in the previous year.

As per provisional results for 1999-2000, HUDCO registered a quantum jump of 43.13 per cent in profit before tax and 20.27 per cent in profit after tax.

The figures are Rs 1.15 billion and Rs 838 million, respectively, against Rs 805 million and Rs 697 million for 1998-99.

During 1999-2000, HUDCO mobilised resources worth Rs 38.36 billion, up 18 per cent from Rs 32.40 billion in the previous year. This was done through a basket of options covering both domestic and external funding sources.

In its maiden effort to raise funds from US markets, HUDCO raised $ 10 million in the form of bonds under the US Agency for International Development housing guarantee programme. The funds have been swapped with Exim Bank for a period of 30 years for rupee funds totalling Rs 436 million.

Suresh said HUDCO has initiated action for raising the second tranche of $ 20 million from the US capital market under the US Housing Guarantee Programme.

UNI

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