- M Ravi Kanth, Chairman and Managing Director, HUDCO
With over 46 years of experience in providing loans for housing and urban infrastructure projects in India, Housing and Urban Development Corporation (HUDCO) is a wholly owned government company. Since inception, HUDCO has sanctioned a total loan amount of Rs 163,000 crore, of which 39 per cent has been sanctioned for housing and 61 per cent or Rs 102,000 crore for urban infrastructure, as on Q3FY2017. What's more, the company has recently announced its initial public offering (IPO). M Ravi Kanth, Chairman and Managing Director, HUDCO, shares more...
In support of the government's Housing for All initiative, has HUDCO set aside a target for its lending strategy?
We have targets in terms of MoUs for housing and urban infrastructure every year, through which we finance housing units across the country. With regards to finance, last year, we disbursed about 31 per cent for housing finance, and it has generally been an increasing trend. As far as the Pradhan Mantri Awas Yojana (PMAY) is concerned, there are two important things: Centrally sponsored scheme and sector schemes like Housing for All.
The credit link subsidiary scheme is a Central Government-led subsidiary scheme. Our role as a central nodal agency is to channel the subsidiary and provide roles to primary lending institutions including public and private banks. Under the credit link subsidiary scheme, banks (public and private) have set targets to release credits (loans) and, thereafter, subsidiary.
What is the synergy between HUDCO and National Housing Bank (NHB) in terms of financing housing projects?
NHB is, in fact, our regulator. But, at the same time, they will also refinance housing projects. So, it works out in a manner where we are the primary lending institution and NHB the refinancing institution. In some instances, when we give loans to economically weaker sections (EWS) and low income groups (LIG), NHB gives us refinancing up to Rs 1,000 crore. Last year, they did so for housing in Rajasthan and Karnataka.
And this year, it has given us Rs 1,000 crore with lower interest rate as refinancing.
How is the infrastructure status for affordable housing likely to complement HUDCO's lending strategy to the sector?
Private parties and state governments will come forward and identify land by notifying what percentage of the dwelling units should be reserved for the EWS and LIG. Thereafter, we will grant them loans, which will contribute to our growth too. In terms of percentage, HUDCO's lending to housing finance has increased from 26 per cent to 31 per cent in the last fiscal; we sanctioned a total of Rs 30,000 crore, of which we disbursed Rs 9,500 crore or 31 per cent for housing and 69 per cent for infrastructure.
With this, and the government's focus on infrastructure, will HUDCO continue its focus on building portfolios of lending more to urban and infrastructure projects?
Definitely. We have the capital adequacy ratio and we do not have any problem of equity. Our capital is Rs 2,500 crore and paid-up capital is Rs 3,100 crore. The government is raising 10 per cent through disinvestment, and our net worth is around Rs 9,000 crore. With all these strengths and plus points, we have no problem in financing projects. We finance 90 per cent of the project cost to state governments. So there is no problem, except that they should fit into our loan criteria such as repayment mechanism, interest rates, tenure of years for repayment, etc.
Delhi and Mumbai are making construction permissions easier and speedier; do you see the results in upcoming projects in these two cities? And isn't it imperative for all states to adopt similar reforms?
With the implementation of RERA, everything has been streamlined and it is being implemented without any exception. Towns and areas that will be covered under RERA have been notified. This will bring about consumer protection and boost investor confidence; in turn, all these factors will help us.
'Housing for All' projects have been connected with smart cities. Is HUDCO likely to facilitate funds for this?
State governments have a major role to play in smart cities. The SPVs formed will be in charge of applying for loans, etc, and we will stipulate our conditions to grant loans for the same. The Pune Municipal Corporation and other SPVs have already approached us for huge loans to the tune of Rs 3,000 crore to Rs 5,000 crore. We received this request from our Mumbai regional office and our head office has examined it; so, it is in process.
What stringent criteria are followed by HUDCO when you lend for housing?
We have appraisal norms. It is a big channel - our project financing wings in the regional offices first go through the master circulars to check whether they fit into the system or not. If convinced, they send them to the head office with the recommendation of the regional chief. From here, it goes to the head of the business unit where it is examined by the three wings: Projects, Finance and Law. It then comes to the Project Approval Committee, after which it goes to the board.
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