Mumbai: Housing Development and Finance Corporation (HDFC), which rejected calls for a reduction in lending rates, has now sought state government's sanction for accepting agricultural property as security for home loans to rural people in Punjab.

HDFC said it has written to Punjab government for allowing it to take agriculture property for mortgage purposes in a bid to advance money to rural people of the state.

"Unlike banks, we are not allowed to mortgage agricultural property under the Agriculture Act in Punjab for advancing loans to rural people for purchasing rural assets,'' HDFC, joint managing director Renu Sud Karnad said.

"If we are allowed to keep the property as security for advance then we will be able to disburse loans to rural people,'' she said.

HDFC, she said, has targeted to disburse Rs200 crore in housing loans to rural people of the state.

The potential for rural lending is quite high as over 70 per cent of population in India resides in rural areas, she said, adding that the corporation would have to devise a mechanism to ascertain income of rural people for advancing loan to them.

"We will have to match the income level of farmers with the crop cycle and try to understand the income generation so as to ensure the repayment of loan for the success of this scheme,'' she said.

She said the northern region comprising Chandigarh, Punjab, Haryana, Himachal Pradesh is a 'potential one', and the corporation has earmarked Rs800 crore for lending in this region this year also.

HDFC had disbursed Rs4,000 crore so far in the northern region, one of the highest growing regions in the country.
On the scope for reduction in interest rates, Karnad said, "I cannot say on this with certainty... but it is for sure that interest rate will not go up further."

Last month, HDFC lowered its prime lending rate by 0.25 per cent to 13.25 per cent.

HDFC, with a 38-39 per cent share of the housing loan market, expects housing loan disbursals to the tune of Rs30,000 crore by the end of the current fiscal, up by 25 per cent compared to last fiscal.

HDFC claims 0.92 per cent default rate and expects 25-30 per cent growth in home lending during next fiscal.