21 states in Hudco defaulter list

Call it benevolence gone awry! And the tab is Rs 2,414 crore. That’s the amount 21 state governments—and the agencies which these ...

Call it benevolence gone awry! And the tab is Rs 2,414 crore. That’s the amount 21 state governments—and the agencies which these governments guaranteed—have defaulted on India’s biggest housing finance company, Housing Urban Development Corporation (Hudco). These states account for 66 per cent of Hudco’s lending portfolio. The norm is to declare them defaulters if the defaults exceed 5 per cent of the total loan sanctioned on government guarantee of such state.

The alarming situation has been highlighted in an update sent out to state urban development and housing ministers by the Centre. The states have been asked to get themselves off this rogue’s gallery, or else Hudco will not sanction and release loan to these states. Besides all the north eastern states barring Nagaland, Gujarat, Karnataka, Maharashtra and Punjab have been put on the list of Hudco defaulters. The others are Andhra Pradesh, Bihar, Chhattisgarh, Goa, Jammu & Kashmir, Jharkhand, Kerala, Madhya Pradesh, Orissa and Uttar Pradesh.

The decision has been taken in view of default in repayment of Hudco loan given to these states or their agencies increasing considerably over the last few years. The rise was steepest though over the last 12 months that statistics have been collated. Total defaults of state governments hit Rs 2,414 crore as on June 30, 2002 from Rs 1,180 crore on March 31, 2001, mapping the last 12 months of the tenure of chairman and managing director V. Suresh.

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After exhausting his 5-year term and an extension which was to expire in July, Suresh was relieved from Hudco on June 5, 2002. Efforts to reach him for his version of this default did not materialise as he was abroad. Suresh’s successor Pankaj Jain did not return phone calls. Hudco’s total sanctions to states for housing and urban infrastructure schemes in five years ending March 31, 2002 stands at Rs 31,845 crore. Besides, another Rs 2,795 crore has been sanctioned under individual housing loan scheme called Hudco Niwas. However, default from this scheme is almost negligible as is true for all retail housing schemes of various banks and housing finance companies. Even non-defaulting state agencies are not eligible to avail loan or loan releases if their state’s default percentage is more than 5 per cent.

According to an official, this has severely affected Hudco’s operations in the states both in housing and urban infrastructure during the current financial year. The states have been asked to resolve their defaults with Hudco so that the corporation can resume its loans to these states.