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Mumbai, July 8 National Housing Bank (NHB) is scouting for international investors for its much-delayed mortgage guarantee company.

NHB has already tied up with the Asian Development Bank and International Finance Corporation, and is looking for two more international investors, Mr R.V. Verma, Executive Director, NHB, said.

The company is in talks with two or three investors and will finalise the remaining two partners soon.

The mortgage guarantee company (MGC) was envisaged in 2002 to compensate lenders such as banks and housing finance companies in case of defaults by home loan borrowers.

With this guarantee, banks will find it easier to securitise their loans as the MGC will encourage standardisation of loan documents and processes, and provide additional credit enhancements to the portfolios of mortgage lenders.

When the MGC was conceptualised, NHB was supposed to hold 26 per cent stake with Asian Development Bank and International Finance Corporation holding 13 per cent stake each. Canada Mortgage and Housing Corporation and Canada-based United Guarantee Company were to be the other partners. However, NHB is now having second thoughts about the shareholding pattern.

“We are revisiting the shareholding pattern. NHB will be the majority stakeholder in the company. However, our stake will be less than 50 per cent,” said Mr Verma.

He was speaking on the sidelines of the India Securitisation Summit here.

Mr Verma expects the MGC to be operational by the end of this fiscal.

The mortgage guarantee company will initially have a paid-up capital of Rs 120 crore. The capital will increase to Rs 1,000 crore in four to five years, he said.

On home loan interest rates, Mr Verma said they should come down as the risk of default reduces for the lender. The formation of the company will also improve the credit flow to borrowers in the high-risk category, he added.

More Stories on : Housing Finance | Mortgage | Real Estate & Construction | Securitisation

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