New Delhi: National Housing Bank (NHB) has cut its prime lending rate ( PLR) by 0.5 percentage points from 10.5% to 10% with immediate effect, NHB chairman and managing director R.V. Verma said.
“The decision has been taken keeping in view market condition and also the need for supporting the industry and individual home buyer,” he said. It will directly benefit all floating rate loans linked to PLR, he said, adding, it should further spur demand for individual housing loan.
NHB directly lend to housing finance companies as well as provide refinance to entities related to the development of housing.
However, large housing finance companies like Housing Development Finance Corp. Ltd (HDFC) and LIC Housing Finance Ltd may not benefit much from this because their borrowings from NHB are a minuscule part of their book.
“Our book is approximately Rs50,000 crore and we borrow just Rs400 crore to Rs500 crore from NHB so the impact will be minimal,” V. K. Sharma, chief executive officer at LIC Housing Finance said.
Last fiscal, the NHB disbursed loan to the tune of Rs14,454 crore registering an increase of 20% over the last fiscal. The loan book size of the bank increased by about 26% in 2011-12 to Rs 28,490 crore as against Rs22,543 crore in the previous fiscal.