Mumbai: Cholamandalam Investment and Finance Co. Ltd is looking to set up a housing finance company (HFC), the non-banking finance company (NBFC) said in an exchange notification on Wednesday. The company is also planning to raise Rs500 crore through masala bonds.

Cholamandalam is yet to make submit an application to National Housing Bank (NHB), the regulator for HFCs. “Board of directors approved the…setting up of a HFC as a subsidiary and approved necessary authorizations to make an application to NHB," the Chennai-based NBFC stated in the notification.

The plan comes at a time when the government is giving a push to affordable housing through its Housing for All mission.

Several firms are looking to set up HFCs, considering the business opportunity offered by the affordable housing segment. In September, Piramal Finance Ltd, the NBFC of Ajay Piramal-led Piramal Enterprises Ltd launched its housing finance company. Piramal Housing Finance offers home loans to developers as well as retail customers. Similarly, in November, Satin Creditcare Network Ltd, a Delhi-based microfinance firm also received housing finance licence from NHB. Reliance Capital listed its HFC Reliance Home Finance Ltd in order to grow its retail business led by affordable housing.

Cholamandalam will also be raising Rs500 crore through masala bonds. Masala bonds are rupee denominated bonds issued in offshore capital markets. The funds will be raised through private placement in one or more tranches.

In March, HDFC Ltd raised $504 million through masala bonds. In October, board of PNB Housing Finance Ltd also approved issuance of masala bonds up to $1 billion.

At 3.09pm, shares of Cholamandalam Investment and Finance Co. were trading at Rs1,298.45, up 0.81% from their previous close, while the benchmark Sensex was down 0.17% at 33,779.19 points.