National Housing Bank (NHB), a subsidiary of the Reserve Bank of India (RBI) and apex body to provide funds to housing finance companies, plans to raise Rs 3,000 crore, mostly through bonds, by June 2009.

The bank has recently announced that it will lend to HFCs at an interest rate of 8% and thereby expects these HFCs to reduce the interest rates in the coming days.

Chairman of NHB, S. Sridhar said, "We plan to raise 3,000 crore (30 billion rupees) primarily via bonds by June 2009. This will be in addition to 4,000 crore (40 billion rupees) refinance facility from the Reserve Bank of India."

"As we have reduced rates, we expect housing finance companies to reduce too and pass on the benefits to consumers. Many housing finance companies have already reduced rates by 50-75 basis points. I expect them to cut rates further," added the Chairman.

The NHB is extending the rural financing at 8% while refinance facility at other sections is provided between 9% and 9.5%. The PLR of the bank has also been reduced by 50 basis points to 10.75%.

"Our fund-raising plans will depend on demand. We are also getting Rs 4,000 crore refinance facility from RBI. We could be raising Rs 3,000 crore by June 2009. Our last borrowing was 10 days ago, which was a zero coupon bond, with effective interest rate of eight percent," he said.

The measures announced by the NHB have induced HFCs to cut down their interest rates. Many of them are planning to reduce the home loans rates to match up with the interest rates offered by the PSU banks for home loans up to Rs 20 lakh.

However Sridhar added that, "We do not have any immediate plans to raise funds from overseas markets."