SBI to raise Rs 20,000 crore for affordable housing, infrastructure projects

01 Feb 2018 CW Team

The State Bank of India (SBI) has recently approved a plan to raise Rs 20,000 crore to finance affordable housing and infrastructure projects through long-term bonds. According to a BSE filing by the bank, the executive committee of the Central Board approved the proposal for issuance of the bonds in the domestic and overseas markets in FY2017-18 and FY2018-19. However, the bank did not specify the denomination of the borrowing. Even in a time when the real-estate sector has registered a multi-year slowdown, the affordable housing segment has gained momentum following the steps taken by the government to provide infrastructure. 'There needs to be clarity on whether the borrowings would be in INR or foreign denominations,' says Rohit Poddar, Managing Director, Poddar Housing and Development. 'A lot of calculations depend on this. We are also keen to know the breakup of this Rs 20,000 crore between the affordable housing and infrastructure sectors. Meanwhile, on the affordable housing front, we believe this move will be successful in letter and spirit only if the funding is made available at a substantially reduced interest rate to real-estate developers.' He further adds, 'This will help pass on the interest cost-saving benefit to home-buyers in the affordable housing segment, who predominantly represent the economically weaker sections (EWS) and low-income group (LIG).' The government is also providing interest subsidy to buyers of low-cost homes under the Pradhan Mantri Awas Yojana (PMAY). Recently, HDFC Capital Advisors, an arm of mortgage leader HDFC, closed its second affordable housing fund, creating a $1 billion corpus. To share your perspective on current industry happenings, write in at feedback@ConstructionWorld.in