Institutional lending to India’s 700 million rural population was less than 10 per cent and was a matter of concern, according to Union Minister of Finance (MoF) Namo Narain Meena, quoting a NSSO survey.
“The survey says only about seven per cent of the financing was done by institutional lenders; about 66 per cent of it was through own resources while 27 per cent was raised from moneylenders. It’s clear that access to institutional finance is a problem,” he said, delivering his inaugural address at the “National Conference on Rural Housing and Housing Finance” on Saturday.
He said the formation of the Credit Guarantee Trust Fund will give a fillip to rural housing finance, apart from the interest subvention of one per cent and added that all stakeholders should look at sustainable solutions to meet the challenge of rural housing requirements, estimated to be around 47 million units, out of which 95 per cent are those people who live below the poverty line.
Earlier, the Chairman and Managing Director of National Housing Bank R V Verma pointed out that housing activity in rural India accounts for 10 per cent of the overall sector’s business, which needs to be scaled up through interventions at multiple levels and stressed the importance of housing in inclusive growth.
He acknowledged that lending to rural housing schemes of State governments do have an element of risk that lenders need to factor in. The executive director of the Reserve Bank of India G Gopalakrishna said that inadequate information about land holdings posed a challenge in rural housing finance, which explains for low institutional lending and consequently demand for informal lending, i.e. from moneylenders.
On the impact of cancellation of coal blocks allotted to firms that had secured bank loans on the basis of such allotments, Meena said, “The inter-ministerial group is looking into it, let’s wait and see if banks with exposure to such allottees are affected.” The CMD of Syndicate Bank M G Sanghvi however acknowledged the predicament when he said, “The problem is there. We can’t have zero risk in lending business.”
Syndicate Bank to seek Rs 1,400 cr in equity capital infusion this fiscal
Bangalore, dhns: Syndicate Bank will be approaching the Centre shortly for an equity capital infusion of Rs 1, 400 crore to fund its growth plans, according to its Chairman & Managing Director M G Sanghvi.
“We are in the process of making a formal proposal to the government of India for raising equity capital to the tune of Rs 1,400 crore. We are also thinking of raising funds through Tier-II bonds and will be finalizing the amount soon,” he said, on the sidelines of a conference on rural housing finance here on Saturday.
Besides, the bank is also raising $ 500 million through medium-term notes (MTNs) to expand business at its London branch, which did a business of Rs 28,732 crore in the first quarter this fiscal compared to Rs 19,395 crore in the corresponding period last year.
The bank had earlier raised $ 500 million in May, 2011 by issuing MTNs having a tenure of 5.5 years with a coupon of 4.75 per cent.