IDBI Home Finance

Even as a final decision on the sale of IDBI Home Finance (IHFL) is pending, the mortgage arm of IDBI Bank has sought time until March 31, 2009, from the National Housing Bank (NHB) to comply with the revised risk weight norms.


Under the new risk weight mechanism prescribed by NHB, IHFL needed an additional Rs 60.26 crore from December 2008 to maintain a capital adequacy ratio (CAR) of 12 per cent.

According to the earlier norms, the IDBI home finance subsidiary’s capital adequacy ratio was 14.7 per cent at the end of November 2008, but under the new guidelines applicable since December, CAR fell to 9.78 per cent.

Confirming the development, an NHB official said, “We have received a letter from IHFL in this regard. We are reviewing the reasons behind non-compliance.” The housing finance regulator needs to assess the steps that IHFL was taking to comply with the norms, he added.

IDBI Bank, which has put the home finance arm on the block, had cited the additional capital requirement as one of the reasons for the sale of IHFL. The proposal to sell the company, where Dewan Housing Finance is the highest bidder, was deferred at the last board meeting as the government sought more time to study the move.