LIC Housing Finance

Playing a significant role in housing development
Housing forms part of the five basic human needs. Food Health Care, Education, Employment and Shelter, fulfilment of which affects level of human development and quality of life. In India, the estimated housing shortage is around 40 million units as at the end of the year 2000 and approximately 200,000 crores investment would be required to meet this deficit. Considering the gravity of the situation the Government declared HOUSING FOR ALL as a priority area while announcing the National Housing Policy 1998.
In order “to create a facilitating environment for growth of housing activity”, the Government announced a comprehensive package of fiscal incentives focussed at : the buyers of dwelling units, the building promoters, the housing finance companies.
Among these changes, the increase in the limit of exemption of interest paid on housing loans from total income upto Rs. 75000 from the earlier limit of Rs. 30000; and the relaxation allowed to housing finance companies to pay tax on actual interest income earned and not on accrued income, will certainly benefit the general individual borrowers directly and at large.
Apart from the changes brought in budget provisions, the Government is trying to ammend the NHB Act and the foreclosure Act also is being ammended to make housing finance companies more viable.
LIC Housing Finance Limited LICHFL completed its 10th Anniversary on 19th of June, 1999. The Company was promoted by LICI, UTI, ICICI and IFCI. Presently (as on 31.03.99), the LICI holds 38.43%, IFCI 12.09% ICICI 10.40%, UTI 12.78% GIC 1.08% and others hold 25.22% of the share in the Company.

During the year 1999-2000 the Company plans to sanction 50000 individual loans for Rs. 1300 crores and disburse over 47500 loans for Rs. 1200 crores.

The Company is having 67 offices spread all over the country, and 6 Regional Offices besides with its Corporate Office at Mumbai. And LIC International, Bahrain acts on its behalf as an extension for the NRIs of Gulf countries.
In these 10 years the Company has established itself as a leader in the field of housing finance. LICHFL has financed 360507 dwelling units till the end of the last Financial Year.
As on 31.03.99 the Outstanding loan portfolio of the Company was Rs. 3638.37 Crores. During the 1998-99, the disbursements of the Company showed a growth of 22.83%. The Company’s total income (net of interest tax) rose to Rs. 561.60 crores in 1998-99 as against Rs. 489.59 crores in the year 1997-98 an increase of 15.65%. The Net profit (after provision for taxes) of the Company rose to Rs. 101.14 crores as on 31.0399 against Rs. 87.73 crores last year, indicating a growth of 15.28%.
The Company has recorded a massive growth in business during the first two months of this FY, 1999-2000. In the first quarter of operation, the growth in individual loans sanction in 36.85% and in disbursements it is 33.07%.
LIC Housing Finance Limited offers loan for Purchase/Construction/Repairs and Renovation and / Extension of existing House / Flat and for purchase of plots allotted by Government / Housing Boards, etc. and to meet the Stamp Duty cost of Registration.
To meet the varying requirement of different customer groups in the face of growing demand and competition among the HFCs we have devised suitable schemes for the NRIs and Professionals, and schemes for the aged and pensioners. The schemes and regularly reviewed and improvised.
There are schemes for financing cost of construction of Stuff Quarters and Office Premises by the Corporate Bodies.
In case of individual loans, loans are sanctioned upto 80% of the Property value subject to income of the applicant. The loan term is fixed according to the Applicant’s age and his remaining service, etc. The existing Rate of Interest of individual loans are as under :

Loan Slab

Rate of Interest

25001 – 500000

500001 - 1500000

1500001 - 5000000

upto 15 yrs	16 to 20 yrs
13.50	13.75
14.50	14.75
15.00	15.25

The differentiating features of LICHFL loans in comparison to other HFCs can be enumerated as under :

The Processing and administrative Fees charged by the Company works out to 1.5%, the lowest in the industry
The loans are backed by a collateral security of LICI insurance policies, this eliminates the debt burden on the family members of the loanee in case of his untimely death, besides its investment value
The loan term may be as long as upto 20 years
There is no prepayment charge in case of early repayment after 5 years of the loan disbursement
The customers don’t have to pay any Interest Tax other than the interest charged
One gets the advantages of Step – up EMI i.e. lower EMI is initially fixed and is increasedlater with increase in his income for the same loan
Maximum loan term of 10 years of NRIs among the HFCs

And to provide the best customer services we operate through single window system manned by trained personnel. We do provide Property Advisory Services free of cost and home services to select customers.
During the year 1999-2000, the Company plans to sanction 50000 individual loans for Rs. 1300 crores and disburse over 47500 loans for Rs. 1200 crores. Besides, these individual loans, the Company plans to sanction Rs. 55 crores to Corporate Bodies, Public Housing Agencies and Developers out of which disbursements will be of the order of Rs. 50 crores. By 31st March 2000, the outstanding mortgage portfolio is likely to cross 4300 crores.