LIC to enter reverse mortgage segment in one month: Mitter

Hyderabad, June 19 (UNI) LIC Housing Finance Limited (LHFL) will foray into reverse mortgage market over the next one month even as it targets to garner Rs 1,000 crore from it newly-launched floating fixed deposit scheme in Andhra Pradesh in 2007-2008.

Consequent to Union Finance Minister P Chidambaram's suggestion in the recent union budget, LHFL has secured clearance from the National Housing Board to launch its reverse mortgage product in the Indian market, LHFL Director and Chief Executive S K Mitter told the media here on the occasion of LHFL anniversary today.

''There are certain legal aspects which are being finetuned and the product (reverse mortgage scheme) will be ready next month, he said,'' Under the scheme, the customer is entitled to 50-75 per cent loan on their property value which will be mortgaged to LHFL. The customer is free to choose the periodicity of interest and principal repayment over a maximum 15 years. LHFL will have the right to dispose of the mortgaged property in case of default to recover its loan.

LHFL also plans to leverage one million agents of LIC along with its 5,000 agents to mobilise funds under its floating fixed deposit scheme launched in April this year. ''In Andhra Pradesh we plan to mobilise Rs 1,000 crore this year,'' he said.

The company, which invested Rs 60 crore in two private equity funds in India, may consider entering venture capital funding on its own over the next two years, depending on the market conditions and the response to its VC investments.

LHFL targets sanctioning Rs 8,060 crore and disbursing Rs 7,355 crores loan in 2007-2008 for which it will need Rs 6,800 crore of funds. In its South Central Region of Andhra Pradesh and Karnataka, it is targetting 44 per cent growth at Rs 1,850 crore for sanctions and disbursement of Rs 1,660 crores, 40 per cent more than last year.

UNI