A recent press report said that the National Housing Bank (NHB) has identified a technical partner for its mortgage guarantee foray and expects this four-way joint venture to take off by March next year.
Reports said that a mortgage guarantee company will provide credit guarantee to housing finance companies and banks on behalf of home loan borrowers. The guarantees are invoked in case of default by home loan borrowers.
Mr. R. V. Vera, Chairman and Managing Director of NHB said that they were at the last stage of the deal. He said that the technical partner would be a US-based mortgage insurance entity which will pick up 36 per cent stake in the proposed joint venture.
Reports said that Mr. Vera did not mention the name of the technical partner, stating that the technical services agreement is yet to be inked. He said that the US-based entity is expected to approach the Foreign Investment Promotion Board (FIPB) for foreign investment approval by December 2011.
Reports said that the Asian Development Bank (ADB) and International Finance Corporation (IFC) will each take a 13 per cent stake and NHB will hold 38 per cent stake in the proposed venture. The initial paid-up capital of the venture will be Rs. 120 crore. The proposed mortgage guarantee company will be a non-banking finance company (NBFC). According to current regulations the mortgage guarantee companies should have a minimum paid-up capital of Rs 100 crore.