India’s 1st mortgage guarantee firm aims to insure Rs 1,000 crore home loan in next 1 year

The company, which provides credit guarantees to housing finance companies and banks, has managed to insure just over Rs 800 crore since its operation started in 2013.

NEW DELHI:India Mortgage Guarantee Corporation (IMGC), the country’s first of its kind company, aims at insuring around Rs 1,000 crore of home loans in the next 12 months on the back of new tieups with banks and housing finance firms.

The company, which provides credit guarantees to housing finance companies and banks, has managed to insure just over Rs 800 crore since its operation started in 2013.

“We will be able to insure around Rs 1,000 crore of home loans in the next 12 months based on our recent tie ups,” said Amitava Mehra, chief executive officer, IMGC.

The company, which insurers home loans between Rs 10 lakh to Rs 75 lakh, has have tied up with ICICI Bank, Diwan Housing Finance and Aditya Birla Housing Finance till now and is in talks with multiple public sector banks for tieups.

“If we manage to tieup with 2-3 lenders in the next 12 months, that would be a good achievement for us,” Mehra said.

Mortgage guarantee, also known as mortgage insurance in some parts of the world, is a product which compensates banks and housing finance companies for losses that may arise when a home owner defaults on a home loan.

The product, if opted for with home loans, can help buyers increase affordability through a bigger loan. Sample this, a salaried individual with a monthly income of Rs 50,000, could in normal circumstances afford a home of Rs 33 lakh, with a loan to value (LTV) of 80%. However, the mortgage guarantee facilitates the individual to acquire a home with higher value of Rs 41 lakh.

However, being a new product, the offtake has been slow. Mehta feels lack of education among consumers and sales agent are hindering the growth.

IMGC is a joint venture set up between National Housing Bank (NHB), Asian Development Bank, International Finance Corporation and US-based Genworth Financial as the technical partner.

NHB is the majority shareholder with 38% stake in IMGC, followed by US-based Genworth Financial with 36%. Asian Development Bank and International Finance Corporation have 13% stake each.

Source: http://realty.economictimes.indiatimes.com/news/allied-industries/indias-1st-mortgage-guarantee-firm-aims-to-insure-rs-1000-crore-home-loan-in-next-1-year/55835086

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