India's first mortgage guarantee entity, Indian Mortgage Guarantee Company (IMGC), has been formed as a joint venture between National Housing Bank (NHB), Asian Development Bank (ADB), International Finance Corporation (IFC) and U.S. headquartered finance security company, Genworth.
The objective of the joint venture is to provide guarantees to the housing finance companies and banks for housing loans made to their customers. These guarantees would help to cover credit risk in the instances of defaults in loan repayments. Also, this would help in avoiding the accumulation of bad debts in the books of mortgage lenders.
In the joint venture, NHB has the largest share of 38 percent, Genworth owns a 36 percent share and both ADB and IFC have 13 percent shares each.
On this matter, Mr. R V Verma, chairman and managing director of NHB said, "We have received the Foreign Investment Promotion Board's approval and will be applying to the Reserve Bank of India for registration in a couple of days."
IMGC has been established completely as a commercial company with the initial paid up capital of Rs. 120 crores. It has been planned that the paid up capital will be raised over time to provide for the venture's growth.
Talking further on the matter, Mr. Verma said, "Adapting itself to the Indian context with a range of customised products for the lending industry and borrowing community, the company will operate under the regulatory jurisdiction of RBI."