HDFC to float insurance subsidiary

BANGALORE, MAR 20: Housing Development Finance Corporation Ltd (HDFC) will soon enter the insurance sector by floating a wholly-owned subs...

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BANGALORE, MAR 20: Housing Development Finance Corporation Ltd (HDFC) will soon enter the insurance sector by floating a wholly-owned subsidiary during this year, company chairman Deepak Parekh said today.

To a question on the expansion on the mutual fund area, Parekh said HDFC wanted to provide all facilities under a single roof with various options for an investor. It was in the housing loan and deposit area. Mutual fund with the income tax exemption is another attractive area for investors. With the opening up of the insurance sector, insurance area was also a major saving area for any individual. Banking operation was another service area which would inter-link the entire operation. Hence HDFC selected these areas to strengthen its core area of housing finance, he added.

Parekh said that HDFC would soon introduce two interest options for the housing loan. Under this options customers could opt for either the fixed interest or floating interest.

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Under the fixed interest, the interest payable against the loan during the entire loan period would not not change but under the floating interest option the interest rates would change according to the market rates, he said. This option would be available for the present customers as well as for the new customers.

He said in the near future such options would be available for deposits also. However, this needed a regulatory clearance, he added. However, he foresaw such changes very soon.

Speaking on HDFC’s performance, he said that the growth was expected to cross 30 per cent during the current year. With housing being the priority area with several investment benefits and the property prices at the low ebb the housing loan area was poised for a big growth.

Replying to a question on nationalised bank’s parallel operations on the house loan sector despite having housing subsidiaries, he said gradually the subsidiary will have to merge with the parent bank as banks are flushed with funds and housing loans are the very low risk area for investment.

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Company executive director RSV Rao who is in charge of the southern operations said that HDFC plans to open ten more such branches in South to provide direct service to the customers. These branches would market all the HDFC products including mutual funds acting as agents, he said.