LIC Housing Finance (LICHFL), the wholly owned subsidiary of Life Insurance Corporation (LIC), is planning to diversify its borrowing basket in the current financial year in a bid to reduce its cost of borrowing by around 25 basis points (bps). The housing NBFC plans to borrow Rs 28,000 crore this fiscal.
LICHFL has already witnessed an improvement in its NIM in the fourth quarter due to re-pricing of loans. Around 30% of its borrowing at present comes from bank loans at an average cost of 10.25%. The borrowing cost would come down if LICHFL resets the bank loan to 10% in instruments like non-convertible debentures (NCDs) thereby enabling it to lower its interest paid in NCDs.
LICHFL net interest margin stood at 2.45% in the fourth quarter against 2.09% in the preceding quarter. The housing finance company also plans to reduce its cost of funds through public deposit scheme.
LIC holds 40.31% stake in LIC Housing Finance while, institutional investors, both foreign and domestic together, are holding 41.47% shares, others hold 18.22% shares.
