Shares of LIC Housing Finance rallied more than 7% to Rs 307.20 apiece on NSE after the Reserve Bank of India (RBI) announced liquidity boositing measures while keeping the key rates unchanged.
In 2018, the RBI put in place a framework for co-origination of loans by banks and a category of Non Banking Financial Companies (NBFCs) for lending to the priority sector, subject to certain conditions.
In Friday’s policy, the central bank decided to extend the scheme to all NBFCs, including HFCs, in respect of all eligible priority sector loans, and allow greater operational flexibility to the lending institutions.
That apart, in recognition of the role of the real estate sector in generating employment and economic activity, the RBI has decided to rationalise the risk weights applicable to individual housing loans, based on the size of the loan as well as the loan-to-value ratio (LTV), and link them to LTV ratios only for all new housing loans sanctioned up to March 31, 2022. The measure, according to the central bank, is expected to give a fillip to the real estate sector.
Meanwhile, the mortgage lender LIC Housing has surpassed pre-Covid business levels in September and expects the momentum to continue with the onset of the festive season. The lender is also targeting double digit growth for the full fiscal year.
While business has seen a substantial dent in the months of March and April, the sentiment had turned and customers were no longer delaying buying decisions buoyed by low interest rates and attractive festive offers.
In July, the mortgage lender had slashed home loan rates to an all-time low interest rate of 6.9% for home loan borrowers. The rate of interest for home loans up to Rs 50 lakh starts from 6.9% for borrowers with CIBIL score of 700 and above. For a similar score, the rate of interest is 7% onwards for loan above Rs 50 lakh.
The non-bank lender has also hired Boston Consulting Group to undertake a digital transformation that would help it to source and process almost 95% loans digitally against 35% presently. The project aims to improve efficiencies at every level of the organisation and will be implemented over the next 21 months.
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