Annual Report 2002-2003
Financial Operations of the Bank: 2002-03
Highlights of NHB's Resource Mobilization 2002-03
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NHB mobilized subscription amount of Rs.1947.90 crore from 7678 investors under the Capital Gains Bond Issue that provided tax exemption to capital gains under Section 54 EC of the Income Tax Act 1961. |
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The Government of India had allocated Tax Free Bonds for Rs.75.00 crore towards implementation of the Golden Jubilee Rural Housing Finance Scheme. |
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The Government made a special allocation of tax-free bonds for Rs.500.00 crore to NHB during the last year for extending loan assistance to the Gujarat earthquake victims. The borrowing programme was successfully completed during the current year. |
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NHB has for the first time obtained rating of its debt instruments and the Fitch Ratings India Private Limited and Credit Analysis and Research Limited have rated the same as AAA (ind) and "CARE AAA" respectively, denoting highest quality carrying negligible investment risk. |
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A sum of Rs.400.00 crore was raised under Tier-II capital having a tenor of 63 months at a coupon rate of 5.77% payable annually. The entire Issue was subscribed by the Life Insurance Corporation of India, on private placement basis. |
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NHB has introduced a policy on interest rate swap transactions (Rupee derivatives), in accordance with the guidelines of the Reserve Bank of India, in order to hedge the interest rate risk associated with its outstanding borrowings. |
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With a view to reducing the cost of outstanding borrowings of earlier years NHB negotiated with the LIC of India and restructured certain outstanding term loans aggregating Rs.602.00 crore carrying an average interest rate of 13.0% thereby reducing the rate of interest payable to 8.0% per annum. |
Details of borrowings during the year
The position of resource mobilization by the Bank during the year July 2002- June 2003 is as under:
| (Rs. in crore) |
|
Source |
Amount Mobilized |
| i) Tax Free Bonds |
575.00 |
| ii)Taxable Bonds |
45.90 |
| iii) Capital Gains Bonds 2002 |
1947.90 |
| iv) Share Capital from the RBI |
100.00 |
| v) Tier II Capital |
400.00 |
| vi) Line of Credit from RBI |
15.00 |
| TOTAL |
3083.80 |
The details pertaining to each of the sources of borrowings are as under:
(i) Tax Free Bonds: (a) The Central Government had allocated tax free bonds for an amount of Rs.75.00 crore for funding a portion of the loan assistance under the Golden Jubilee Rural Housing Finance Scheme for construction of 2,25,000 dwelling units during the year. The coupon on the Bond was 5.75% p.a. with a tenor of 10 years with a put/call option at the end of 7th year. As on June 30, 2003, the outstanding cumulative borrowing under Tax Free Bonds since the inception of the Scheme in 1997-98 was Rs.600.00 crore .
(b) Special allocation of Tax Free Bonds for extending loan assistance to Gujarat Earthquake victims: Towards extending loan assistance to earthquake victims of Gujarat, the Government had allocated tax free bonds of Rs. 500.00 crore to NHB during 2001-02. The funds were mobilised during the current year in two tranches -- Rs.300.00 crore at a coupon rate of 5.15% p.a. and Rs.200.00 crore at 5.25% having a tenor of 7 years with put and call option at the end of the 5th year. Interest is payable at annual rests.
ii) Taxable Bonds: An amount of Rs. 45.90 crore was raised through issue of Taxable Bonds on private placement basis at a coupon rate of 6.0% per annum, payable annually with a tenor of 3 years. The cumulative outstanding amount of Taxable Bonds (Seven series) issued so far by NHB stood at Rs.1, 333.30 crore as on June 30, 2003.
(iii) Capital Gains Bonds 2002: The Capital Gains Bonds Issue 2002 with a tenor of 7 years (put/call option at the end of 3rd year) was opened for subscription on private placement basis on 14th August 2002 with a coupon rate of 7.15% p.a. Keeping in tune with the declining trends in the general interest rates, the coupon on the Bonds was revised thrice during the year. The amount of subscription received and the number of investors are given below:
| Coupon Rate (p.a.) |
Period of Issue |
No. of Investors |
Amt Received (Rs.) |
| 7.15% |
14.08.2002-06.11.2002 |
628 |
706,87,40,000 |
| 6.50% |
11.11.2002-05.01.2003 |
503 |
370,81,10,000 |
| 6.00% |
15.01.2003-07.02.2003 |
918 |
74,95,40,000 |
| 5.50% |
10.02.2003-30.06.2003 |
5629 |
795,26,30,000 |
| |
TOTAL |
7678 |
1947,90,20,000 |
iv) RBI's additional contribution towards paid-up capital: The Reserve Bank has contributed an additional amount of Rs.100.00 crore towards the paid-up capital of the NHB during the year. With this contribution, the authorised and paid up capital of the NHB stood increased to Rs.450.00 crore as on June 30, 2003 as compared to Rs.350.00 crore as on June 30, 2002.
v) Tier II Capital
The Bank mobilized Rs.400.00 crore by issuing Tier II Bonds having tenor of 63 months at a coupon rate of 5.77% payable annually. The entire issue was subscribed to by the Life Insurance Corporation of India. This first time induction of the tier II capital has helped NHB in leveraging its business operations and is expected to substantially impact refinance disbursements during the year 2003-04. The issue was rated 'AAA(ind)' by Fitch Ratings India Private Limited and 'CARE AAA' by Credit Analysis and Research Limited.
vi) Line of Credit from the RBI
The Reserve Bank of India (RBI) had approved a line of credit of Rs.1000.00 crore to the National Housing Bank for extending financial assistance to the earthquake affected people of Gujarat. During the year, a total amount of Rs.15.00 crore was availed from the RBI under the line of credit whereas an amount of Rs.13.53 crore was disbursed to the commercial banks, housing finance companies and public agencies towards construction of 1130 housing units. As on June 30, 2003 a cumulative amount of Rs.90.00 crore has been drawn from under this facility from RBI and Rs.88.65 crore was disbursed for construction of 13083 housing units.
Rating of borrowing programme
During the year rating exercise of NHB's debt instruments for Rs.1800 crore was completed. The borrowing programme has been rated 'AAA (ind)' by Fitch Ratings India Private Limited and 'CARE AAA' by Credit Analysis and Research Limited. Instruments carrying the above rating, which is the highest in this category, are considered to be of the best quality, carrying negligible investment risk. The ratings reflect the status of NHB, a wholly owned subsidiary of Reserve Bank of India, as the Apex Financial Institution for the housing sector, very strong asset quality with zero NNPAs and 100% recovery, strong parentage and high capital adequacy, strong resource raising abilities, good profitability and comfortable interest coverage. The strong growth prospects of the housing sector and very low default rates demonstrated by housing loans over past several years are additional comforting factors.
The details of financial assistance extended by NHB during 2002-03 in the form of refinance and direct finance are given below:
GENERAL FUND
| (Rs. in crore) |
| Refinance Disbursals |
2001-02 |
2002-03 |
Cumulative |
| a) Individuals |
1023.80 |
2709.72 |
9721.11 |
| b) Projects |
0.00 |
0.00 |
234.50 |
| Total |
1023.80 |
2709.72 |
9955.61 |
| Direct Finance Disbursal |
92.21 |
58.27 |
255.16 |
| Total disbursals from General Fund |
1116.01 |
2767.99 |
10210.77 |
Slum Improvement & Low Cost Housing Fund
| Refinance : Orissa Cyclone Projects |
1.00
0.00 |
0.00
0.00 |
5.47
11.29 |
| Direct Finance : Projects |
19.04 |
14.79 |
85.70 |
| Total |
20.04 |
14.79 |
101.46 |
REFINANCE
The year 2002-03 has been a year of unprecedented growth and achievement as far as refinance disbursal was concerned. The refinance disbursements reached an all time high of Rs. 2709.72 crore, as compared to the previous year's figure of Rs. 1024.80 crore resulting in a growth of around 164% over the previous year. The growth in disbursements is attributable largely to the Liberalised Refinance Scheme (LRS) launched in February 2003 which has evoked enthusiastic response both from HFCs and Scheduled Commercial Banks. The comparative chart showing disbursements to various categories of PLIs vis-à-vis the corresponding figures last year is as under :
| (Rs. Crore) |
| |
2002-03 |
2001-02 |
| |
Fixed |
Floating |
Total |
|
| Releases to HFCs |
550.01 |
1216.68 |
1766.69 |
705.33 |
| Old Scheme (Jul 2002 - Feb 2003) |
219.61 |
0.00 |
219.61 |
|
| New Scheme (Mar 2003 - Jun 2003) |
330.40 |
1216.68 |
1547.08 |
|
| Releases to Banks |
770.00 |
20.00 |
790.00 |
76.99 |
| Old Scheme (Jul 2002 - Feb 2003) |
0.00 |
0.00 |
0.00 |
|
| New Scheme (Mar 2003 - Jun 2003) |
770.00 |
20.00 |
790.00 |
|
| Releases to Cooperative Institutions |
139.77 |
0.00 |
139.77 |
219.15 |
| Releases Under Gujarat Earthquake Scheme |
13.26 |
0.00 |
13.26 |
23.33 |
| Total |
1473.04 |
1236.68 |
2709.72 |
1024.80 |
Asset quality has been the main focus of NHB as can be seen from the fact that funds disbursed during the year to 6,5 and 4 star rated companies aggregates Rs. 1668 crores and the funds lent to rated scheduled commercial banks and cooperative banks was Rs. 790 crores, in all aggregating to Rs. 2458 crores. Further, funds have been lent in the cooperative sector to select ACHFS and ARDBs which aggregate to Rs. 140 crores. The funds to 3 star and 2 star companies were Rs. 69 crores and Rs. 30 crores respectively besides Rs. 13 crores under Gujarat Earthquake Scheme.
While the disbursements to Scheduled Banks in the previous year was Rs. 86 crores, the comparative figure for this year is Rs. 798 crores, showing more than ninefold increase, due to the LRS. We are hopeful that in the year 2003-04, we would be able to bring more banks into our fold.
The incremental yield on all disbursements for 2002-03 (July to June) aggregating to Rs. 2697 crores was 7.34%. The incremental cost of funds for the year was 6.03% giving an incremental spread of 1.31%.
Cumulative Disbursements up to 30th June, 2003
| (Rs. in Crore) |
| Institution Category |
|
| Housing Finance Companies |
7303.00 |
| Scheduled Banks |
1232.42 |
| Cooperative Sector Institutions |
1425.66 |
| Total |
9961.08 |
Performance under the Golden Jubilee Rural Housing Refinance Scheme
(included in the total figures given above)
The Golden Jubilee Rural Housing Refinance Scheme was launched in the year 1997 for promotion of housing activity in the rural areas. In order to give a boost to the flow of funds for rural housing, it was also decided during the year 2002-03, to extend 25 basis points concession in interest rates for claims made under this scheme. A total of Rs.335.96 crore was disbursed under the scheme during 2002-03 as compared to Rs 222.20 crore disbursed during the previous year. The break up of the disbursements made under the scheme is as under:
| (Amount in Rs. Crore) |
| Institution Category |
Amount |
| Housing Finance Companies |
298.06 |
| Scheduled Banks |
0.00 |
| Cooperative Sector Institutions |
37.90 |
| Total |
335.96 |
Gujarat Earthquake Scheme
(included in the total figures given above)
During the year, an amount of Rs.13.26 crore was released under the scheme, taking the cumulative disbursements made under the scheme to Rs.37.21 crore till 30th June, 2003.
Year-wise refinance disbursement under the Gujarat Earthquake Scheme is given below:
| Year |
Refinance (Rs. crore) |
| 2000-01 |
0.62 |
| 2001-02 |
23.33 |
| 2002-03 |
13.26 |
| TOTAL |
37.21 |
PROJECT FINANCE
The Bank extends financial assistance to public housing and development agencies all over the country for undertaking various types of housing projects. The financial assistance is extended either out of the General Fund or through Special Fund.
The Bank provided direct financial assistance to the tune of Rs.73.06 crore during the current year (including the amount lent from the Special Fund and the assistance under Gujarat earthquake scheme) and sanctioned projects with a cost component of Rs.117.66 crore and loan amount of Rs.84.46 crore.
Cumulatively, till the end of June, 2003, NHB has disbursed Rs.586.63 crores under its project financing window. NHB has so far sanctioned 353 projects (including projects sanctioned to support Gujarat earthquake victims) where financial assistance has been made available through the direct as well as the refinance route. These projects had a cost component of Rs.2370.71 crore and a loan component of Rs.1689.54 crore. Out of these 353 projects, refinance assistance was provided to 218 projects from the General Fund whereas refinance assistance to 10 projects was provided under the Special Fund. During the year 2002-03, however, no refinance assistance was provided under project finance schemes.
Summary of project finance assistance provided by the Bank under the General Fund and the Special Fund are given below:
A. General Fund
Under this window, a total of 6 Land Development & Shelter Projects (LDSP) have been sanctioned during 2002-03 having a cost component of Rs.85.27 crore and loan amount of Rs.64.05 crore. Cumulatively, 38 projects having project cost of Rs.816.08 crores and loan component of Rs.406.68 crore have been sanctioned under this window. During the year 2002-03, NHB disbursed a sum of Rs.58.00 crore under this window in addition to finance for projects under Gujarat earthquake scheme.
Assistance to Gujarat Earthquake Victims
With a view to ameliorating the trauma caused by large-scale destruction of property and infrastructure by the Gujarat earthquake in January, 2001, NHB had formulated guidelines for providing financial assistance to state government agencies engaged in relief work in Gujarat. So far, under this Scheme, NHB has sanctioned Rs.546.35 crore. However, the major portion of this amount is yet to be drawn by the implementing agencies.
B. Special Fund:
Under this window, NHB sanctioned 6 Projects during 2002-03 having project cost of Rs.28.77 crore and loan amount of Rs.17.36 crore. Cumulatively, 82 projects having project cost of Rs.311.49 crore and loan component of Rs.193.99 crore have been sanctioned under this window. During the year 2002-03, NHB disbursed a sum of Rs.14.79 crore under this window, taking the cumulative disbursal under this head to Rs.85.70 crore.
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