State owned Housing and Urban Development Corporation or HUDCO launched their Rs 1,200 crore initial public offering (IPO) on May 8, 2017. As of this morning, the IPO has been subscribed a total of 0.63 times with over-subscription coming in from the retail end.

In an interview to CNBC-TV18, Ravi Kanth Medithi, CMD and Rakesh Kumar Arora, Director-Finance at HUDCO spoke about the IPO and the latest happenings in the company.


Sonia: Is your disbursement likely to remain at 7-10 percent and any kind of growth of pace in disbursements?

Medithi: With the actionable programmes of the Government of India like Housing For All, Pradhan Mantri Awas Yojana and HUDCO being a very long experienced organisation, 47 year old experience and expertise as a techno financing government company, we are an integral part of all actionable, flagship programmes of Government of India and right now under the credit linked subsidy scheme we have been bestowed the role of central nodal agency for channelising the subsidy as well as we are a primary lending institution to give credit to individual loan seekers under HUDCO Niwas under retail financing wing.

Latha: Your spread has come down from 2.5 percent in 2014 to 1.94 on December 31. Is this a trend that will continue? Will you see fall in spreads? 

Arora: No, It's not like that. There are specific circumstances. As we said we are a housing finance company, we are registered as a housing finance company and 31 percent of our book is housing finance and 69 percent is urban infrastructure. So from 2013 we are only lending to the government and government agencies.

There were certain loans which were given prior to 2013 to certain private sector projects where we joined them as a consortium partners. So those loans because the company did not participate in the cost overrun and time overrun because they were urban infrastructure projects and they were cost overruns and time overruns. Therefore, as per the regulations because we are following the title as housing bank regulation, so after 98 days we have to classify them as NPA if interest or repayment is not serviced. So once these accounts went as NPA the interest income on those particular projects stopped recognising, so by end of December 31, 2016 most of these accounts are already out. So this is the least that we are talking about, it's around 2.10 or 2 percent.

Sonia: Not just you loan growth but your profit has also been growing at a very slow pace, just 3-5 percent over the past three years. Will that be the pace of growth in future in your profits as well?