The National Housing Bank (NHB) has given a green signal to Reliance Capital (Rel Cap) to open an independent housing finance company (HFC). The company had approached the housing regulator in July 2008 to get an approval for running this firm.

Rel Cap is already operating a mortgage business through its wholly owned consumer finance subsidiary named as Reliance Consumer Finance but now it plans to kick off this business through an individual HFC.

The firm has also got an approval from the Reserve Bank of India (RBI) to start a separate arm for its mortgage business. Moreover the nod by the regulators would also enable Rel Cap to avail special facilities like refinance, repossession and lower capital adequacy. Besides raising funds through external commercial borrowings (ECBs would also be possible.

CEO of Rel Cap, Sam Ghosh said, "The approval will help us focus on both businesses, separately. Also, the approval to operate as a housing finance business will help us get loans at cheaper rates."

Initially the firm plans to capture the housing loan market in metros and thereafter the smaller cities will be covered once the business expands.

Reliance Capital is a financial subsidiary of the Reliance Anil Dhirubhai Ambani Group (ADAG). The arm focuses in the financial services including asset management, insurance, stock brokerage and commodity exchanges.

The consumer finance arm of the group offers a range of financial products such as personal loans, auto loans and business loans.