June 7 (Bloomberg) -- Housing Development Finance Corp., India’s biggest mortgage company, expects central bank approval soon for a plan to borrow $500 million overseas to finance home loans for the poor.
The proceeds from the dollar-denominated borrowing will be used to fund low-cost “affordable housing” projects, V. Srinivasa Rangan, executive director at the Mumbai-based company, said in an interview at his office on June 5.
The Reserve Bank of India unveiled rules in December to allow property developers, mortgage companies and National Housing Bank, a regulator for home finance lenders, to raise funds abroad to finance mortgages for the needy. The total that can be raised under the program for all companies is $1 billion.
“I guess the approval should come soon,” Rangan said. “We had applied for $500 million with RBI. Currently, this is the window available for housing finance companies to borrow overseas.”
Mortgage lenders will cap individual home loan amounts at 2.5 million rupees ($43,800), and the cost of the property cannot exceed 3 million rupees under the rules. About half the population in India’s financial hub, Mumbai, lives in slums.
India’s housing industry is largely unregulated and opaque and consumers are often unable to access sufficient information or hold builders accountable, according to the government. Prime Minister Manmohan Singh’s cabinet approved a bill this month seeking to regulate the residential housing industry to protect home buyers.
To contact the reporter on this story: Anurag Joshi in Mumbai at firstname.lastname@example.org
To contact the editor responsible for this story: Katrina Nicholas at email@example.com