MphasiS founder to set up housing finance firm

MphasiS technology firm, jaitirth Rao, the former Citibank India head is planning to set up a housing finance corporation to provide loans to low income home buyers. He is targeting buyers whose apartments cost about Rs 10 lakh each.

?We have submitted a request to the National Housing Bank and are awaiting regulatory approval,? said PS Jayakumar, co founder and MD at Value and Budget Housing Corporation. VBHC is jointly promoted by Mr Rao and Mr Jayakumar, and is looking to build homes for the poor.

A home loan company that arranges finance for the buyers is expected to fit in with VBHC?s business plans. Mr Rao declined to comment on the issue. Mr Jayakumar said proposed financial institution will have independent investors and management.

?The credit access to this urban market segment is very limited and will be driven through the proposed housing finance arm,? he added. This will be a mortgage loan of 15 years and the target buyer segment would be in the Rs 8,000-25,000 per month-income bracket.

The Indian home loan market has become extremely competitive after the entry of PSU banks about four years ago. The opportunity is there for a new firm such as the one Mr Rao is looking to promote with growth rates of over 30%, but there are lots of hurdles as well. Thanks to the lower cost of funds, the PSU banks have resorted to aggressive pricing with ?teaser rates?.

The teaser rate was also a product of the economic slowdown as banks felt the need to revive economic activity through cheap lending. This phenomenon should come to a close once the base rate concept kicks in from July this year. To be competitive, Mr Rao?s firm needs to ensure access to cheap funds even as it competes with the likes of SBI and HDFC and private players like DHFL.

?Apart from lending for our own project, we will also provide home loan to other similar projects,? Mr Jayakumar added. He refused to elaborate further. VBHC would be developing 1,904 apartments over 16 acres, priced at in the Rs 4.5-10-lakh, in Bangalore.

?We are currently awaiting certain approvals and will be launching by the end of this month,? added Jayakumar. The apartments would be small in size ? 350 sqft for studio units, 450 sqft for a single bedroom unit and 620 sqft for two bedroom units.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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