Tata Capital Housing Finance Ltd (TCHFL) plans to disburse housing loans worth Rupees two to four hundred crores in the current financial year (2009-10) with focus on tier-II and tier-III cities.

Praveen P. Kadle, managing director, Tata Capital Ltd. said, "Our focus would be to disburse housing loans up to 85% of the property value, priced in the bandwidth of 8-12% interest rate for a tenor of 12-240 months to the middle income group of the society. The minimum loan amount would be Rs. 2 lakh."

A re-entrant in housing finance business, Tata Capital Housing Finance Ltd (TCHFL) is a wholly-owned subsidiary of Tata Capital Limited. The company has presence in retail finance and provides loans against property, auto loans, personal loans and loan against property among its products. The parent company, Tata Capital holds an asset base of Rs. 8,000 crore, with retail and corporate finance in 50:50 ratios. The retail portfolio comprises of personal loans, loans against property and is mainly dominated by auto finance.

"The rate of interest on these loans would range from 9.25 to 12 per cent with a repayment period that would range from one year to 20 years," said Shyam Mani, chief operating officer, retail finance. Tata Capital will finance the home loan amount up to 85 per cent of the property value, with ratio varying from 55 to 60 per cent.

Sanjay Shukla, business head mortgage business, TCHFL added "We will have strong underwriting clause and the sole collateral on the loan would be the house itself and there would be a pre-penalty charge of maybe 2 per cent, but nothing is finalised on the terms of the loan."

TCHFL expects housing finance to reach 14 percent (Rs 200,000 crore) by 2011-12 from the current figure of 8 per cent. Over the next two years, the company also plans to accept fixed deposits (FDs) after statutory approvals from the National Housing Bank (NHB).