Financial Operations of the Bank during 2003-04

Annual Report 2003-2004

Financial Operations of the Bank during 2003-04

Resource Mobilization

The Bank continued its persistent efforts to build a low cost resource base by tapping diversified sources, where funds are available at competitive rates for preferred tenures. During the year, resources were raised by issuing bonds as under:

Capital Gains Bonds:

The Bank continued to mobilise funds by issuing Capital Gains Bonds at coupon rates of 5.25% per annum payable annually (having a tenor of 7 years with put and call option at the end of 5th year) and 5.10% (having a tenor of 5 years with put and call option at the end of 3rd year). During the year an amount of Rs.2390.04 crore has been mobilised.

Taxable Bonds:

The Bank mobilised a sum of Rs.500 crore by issuing Priority Sector Floating Rate Taxable Bonds, having a tenor of five years, in June 2004. The Bonds have been floated at a spread of 60 bps over the 1 year GOI (semi-annual) benchmark (as set on <INBMK=F3> page of Reuters).

The Bank had also mobilised Rs. 50 crore in September, 2003 by issuing bonds with a tenor of seven years carrying an interest rate of 5.35% per annum.

Tax Free Bonds

The total mobilization of fund under this category is Rs. 50 crore. This was mobilized at a rate of 4.75 % with tenure of 10 years with a put/call option of 7 years.

Apart from raising low cost funds, the Bank also endeavoured to reduce the cost of the existing liabilities by way of early repayment or restructuring of payment terms as detailed below:

Borrowings from RBI under Long Term Operations Fund

An amount of Rs.125 crores was prepaid to the Reserve Bank of India in May, 2004, in order to reduce the cost of outstanding liabilities.

Loan from Banks and FIs

The loans aggregating to Rs. 400 crore availed from Banks/Financial Institutions were repriced during the year in order to reduce the cost of funds.

Rating of borrowing programme

Rating has been obtained for Bonds amounting to Rs.5760 crore issued by the Bank. While Fitch has awarded a rating of ‘AAA (Ind)’, a rating of ‘CARE AAA’ has been awarded by CARE to the bonds. This rating indicates “highest degree of certainty regarding timely payment of financial obligations on the instruments.”
Listing of the Bonds:

Most of the borrowings/bonds of the Bank have been got listed on the Bombay Stock Exchange as well as the National Stock Exchange. In the remaining cases, listing arrangements are underway.

Deployment

The details of financial assistance extended by the Bank during 2003-04 in the form of refinance and direct finance are given below:

GENERAL FUND

(Rs. in crore)
[A] Refinance Disbursals 2001-02 2002-03 2003-04 Cumulative
a) Individuals 1023.80 2709.72 3252.89 12974.00
b) Projects 0.00 0.00 0.00 234.50
Sub - Total 1023.80 2709.72 3252.89 13208.50
[B] Direct Finance Disbursal 92.21 58.27 38.51 293.66
Total disbursals from General Fund [A + B] 1116.01 2767.99 3291.40 13502.16

SLUM IMPROVEMENT & LOW COST HOUSING FUND
(Rs. in crore)
[A] Refinance : Orissa Cyclone Projects 1.000.00 0.000.00 0.000.00 5.4711.29
Sub Total 1.00 0.00 0.00 16.76
[B] Direct Finance : Projects 19.04 14.79 5.98 91.69
Total [A + B ] 20.04 14.79 5.98 108.45

Disbursements made during the last two years constituted 44.67 per cent of the total disbursements since inception in 1988.

Refinance Operations

During the year ended 30th June, 2004, refinance aggregating Rs.3252.89 crore was released, as against Rs.2709.72 crore during the corresponding period last year registering a growth of 20.05%. This is an all-time high achievement for the bank. Trend of refinance releases during the last few years is captured in the diagram given below:

The comparative position of disbursements under refinance to various categories of primary lending institutions [PLIs] vis-à-vis the corresponding figures last year is as under:
(Rs. Crore)
2002-03 2003-04
Housing Finance Companies 1766.69 1845.86*
Banks 790.00 1275.50
Cooperative Institutions 139.77 118.10
Gujarat Earthquake Scheme 13.26 13.43
Total 2709.72 3252.89

* Out of this a sum of Rs.84.00 crores was disbursed under the Short term Facility

Fixed and Floating rate Disbursements

The ratio of fixed to floating rate disbursements during the current year [52:48] was almost the same as observed during the previous year [54:46]. The share of HFCs in the floating rate disbursements continued to be around 98% during 2003-04 indicating the HFCs’ preference for floating rate borrowings. Scheduled banks on the other hand have shown a strong preference for fixed rate borrowings. As on June 30, 2004 the composition of outstanding refinance under fixed and floating rates was 70:30.

Cumulative Refinance Disbursements up to 30th June, 2004

Institution Category Amount (Rs. in Crore)
Housing Finance Companies 9164.87
Scheduled Banks 2516.63
Cooperative Sector Institutions 1543.76
Total 13225.26

Refinance provided for loans given under the Golden Jubilee Rural Housing Finance Scheme

During year 2003-04, refinance assistance of Rs. 1700.88 crore was made in respect of housing loans disbursed by the PLIs under the Golden Jubilee Rural Housing Finance Scheme (GJRHFS). This constituted 52.29% of the total refinance disbursement of Rs.3252.89 crore during the year. To promote rural housing, the Bank introduced an interest concession of 25 basis points in September 2003, for refinance in respect of rural housing loans disbursed by the PLIs under the scheme.

Asset Quality

The growth in volumes has been achieved while maintaining good asset quality. The overall quality of Bank’s assets is good, with the institution continuing to enjoy the enviable status of being a Nil Net NPA institution.

Project Finance

The Bank continued to extend financial assistance to public housing and development agencies for undertaking various types of housing projects.

During the current year, the Bank approved 19 projects having total project cost of Rs.111.26 crore and loan component of Rs.83.80 crore and disbursed Rs. 44.49 crore (including the amount lent from the Special Fund and the assistance provided to Gujarat earthquake victims) as direct finance.

Cumulatively, till the end of June, 2004, the Bank has sanctioned 372 projects (including projects sanctioned to support Gujarat earthquake victims) having project cost of Rs.2481.97 crore and loan component of Rs. 1773.76 crore. Out of these 372 projects, refinance assistance was provided to 228 projects. The remaining 144 projects were financed through direct finance window under both General and Special funds. So far the Bank has disbursed Rs. 631.14 crores as project finance of which Rs. 245.79 crore was disbursed as refinance and remaining Rs. 385.35 as direct finance. The details of the direct finance provided out of General and Special Funds are as follows:

General Fund

Cumulatively, 54 projects having project cost of Rs. 1452.18 crores and loan component of Rs. 1024.80 crore have been sanctioned and financial assistance worth Rs. 293.66 crore has been provided from General Fund. During the year 2003-04, 10 Projects having a project cost of Rs.89.75 crore and loan component of Rs.67.59 crore were sanctioned and a sum of Rs. 38.51 crore was disbursed which included Rs. 2.50 crores for projects under Gujarat Earthquake Relief Scheme.

Special Fund:

Cumulatively, 90 projects having project cost of Rs. 333.00 crores and loan component of Rs. 206.44 crore have been sanctioned and financial assistance worth Rs. 91.69 crore has been provided from Special Fund. During the year 2003-04, nine projects having a project cost of Rs.21.51 crore and loan amount of Rs.16.21 crore were sanctioned and a sum of Rs. 5.98 crore was disbursed.