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Sundram Finance ventures into housing finance - Views on News from Equitymaster
 
 
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  • Jan 6, 2000

    Sundram Finance ventures into housing finance

    Sundram Finance (SF), a major player in the retail finance business has floated a new company, Sundram Home Finance (SHF), with the objective of providing home finance to individuals.

    The new housing company will have a paid up capital of Rs 500 m, which is to be infused in two stages. Sundram Finance has picked up 65% stake in the new venture by investing US$ 7.5 m while International Finance Corporation will hold 20% (US$ 2.3 m). A multinational financial institution is expected to pick up the balance 15%.

    SHF has also entered into a strategic tie-up with United India Insurance to provide housing insurance at a low premium. Talking to the press, Mr. Nitin Palany, managing director of SHF said, that the customer would have to pay premium only once at the time of disbursement of the loan. The insurance on the mortgage property will then be available over the tenure of the loan. A unique feature of the insurance offered through this route is that the one-time payment of premium will be less than 50% one would normally pay. Typically, housing premiums are paid every year till the term of the loan.

    SHF plans to offer housing loans at competitive rates of 13.5% for loans up to Rs 1,000,000 and at 14.5% for loans above Rs 1,000,000. The table below clearly shows that SHF has tried to place itself at par with the leader of the industry HDFC. It will initially offer its services in south India and will leverage on the strength of its parent company, which has a strong national network of 95 branches with 57 of them located in the south. SHF will also make use of the huge data bank of retail clients built by SF. This will be advantageous for SHF as the time taken to appraise and process the home loan application is reduced.

     

     

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