LIC Housing plans to raise Rs 50,500 crore through debt securities

mortgage lender LIC Housing Finance will seek shareholder approval at its annual general meeting (AGM) on September 28 to raise up to Rs 50,500 crore. Fundraising will be through the issuance of debt securities or other hybrid instruments on a private placement basis. The company plans to raise the amount in one year by issuing debt securities in one or more tranches, until the next general meeting.

In its annual report released on Wednesday, the housing finance company also warned of a moderation in profitability due to the pandemic.

Mr. Kumar, Chairman of LIC Housing Finance, said: “Loss of livelihoods and reduced income, particularly for self-employed borrowers, can impact our income and asset quality and we may need to -be prepared for a moderation in profitability indicators. .”

The company has devised a 4-R strategy – retail, recovery, retention and re-engineering – as the driving force to fight Covid-19.

However, Siddhartha Mohanty, Managing Director (MD) and Managing Director (CEO), LIC Housing Finance, said falling non-performing assets (NPAs) and a weak moratorium give the confidence to take out good housing loan deals. LIC Housing Finance Stage 3 gross lending declined 3 basis points (bps) to 2.83% in the June quarter from 2.86% in the prior quarter.

Similarly, loans under moratorium during phase two remained at 25%, remaining at the same level as phase one. The central bank had allowed lenders to provide moratorium relief to borrowers for three months from March 1, in the first phase. The regulator extended the moratorium period by three months until August 2020 in the second phase.

Siddhartha Mohanty previously told FE that the lender expects fewer borrowers to opt for loan restructuring, compared to the portfolio of loans under moratorium until the end of June. The Reserve Bank of India (RBI), on August 6, had authorized the resolution of personal and commercial loans with strict barriers.

LIC Housing Finance had recorded a 34% year-on-year (year-on-year) growth in net profit in the June quarter to Rs 817 crore due to the reduction in provisions. Total provisions decreased by 77.69% in the June quarter to Rs 56.5 crore from Rs 253 crore in the same period a year ago.