For undertaking home loans business in the North-Eastern part of India, Life Insurance Corporation of India Housing Finance (LIC Housing Finance) is planning to float a separate subsidiary or special purpose vehicle (SPV). The second largest standalone housing finance company of the country has hit upon this strategy as local laws in some of the North-Eastern States do not allow creation of a mortgage to convey a property as security to a lender against a loan.
The operations of the proposed arm, which will be in the nature of a special purpose vehicle (SPV), will be limited to the acquisition and financing of specific assets in the North-East. VK Sharma, Managing Director and Chief Executive Officer, LIC HF said that in the North-East, LIC HF has a typical problem.
It cannot create mortgages because of local laws. So, there is a hindrance in giving loans. But people need loans for building houses. Hence, the company’s board has given permission to explore the setting up of a kind of SPV for the north-eastern areas of the country, he added.
The LIC HF chief observed that it is important to create organisations and systems to ensure that those living in the North-Eastern part of the country Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura – are absorbed into the national mainstream.
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