After becoming a fully-owned subsidiary of BHW Holding AG of Germany, BHW-Birla Home Finance has upped the ante by offering a floating interest rate of 7.25 per cent, which it claims is the lowest in the industry. 
 
This, and other steps, the company hopes will expand its customer base by 10 times to 500,000 in the next five years. 
 
"At present, most banks like SBI Home Finance, ICICI Bank, HDFC etc are offering loans with a floating interest rate between 7.5 and 8 per cent. But, we want to establish our presence in the Indian market with the lowest rate. The unsecured loan from International Finance Corporation and securitisation of portfolio by National Housing Bank are the factors enabling us to peg the rate at 7.25 per cent," R S Raghavan, executive director of BHW-BHFL said. 

• Housing and Home Loans
  

He added that the customers should not wait for a lower interest rate as the rates are unlikely to plunge further with RBI governor Y V Reddy promising to stabilise rates. 
 
BHW-BHFL is also targeting the weaker and disadvantaged sections of the society through schemes like Easy Home Loan Deposit. 
 
"This is a savings linked scheme for customers who can provision for home building, expansion and renovations. The scheme entitles depositors to get a loan at a concessional rate of 5 per cent, achieving a predetermined savings target. It will also cater to customers who cannot get standard loans owing to financial barriers," Reinhard Wagner, chairman of BHW Group said. 
 
At present, BHW-BHFL has an asset base of Rs 400 crore (Rs 4,000 million) with a customer base of 51,000. The company aims to leverage its network of 14 branches and 24 satellite offices to grow its customer base exponentially. 
 
BHW-BHFL was originally incorporated as ITC Classic Home Finance in 1995. Later it was taken over by the Birla Group in 1999 through CFCL. In September 2000, BHW Holding AG and CFCL became 50:50 joint partners of BHFL. 
 
In May this year, BHW Holding AG acquired a controlling stake in BHFL after buying out its equal joint venture partner, the K K Birla flagship Chambal Fertilisers and Chemicals, for Rs 100 crore (Rs 1,000 million). 
 
BHW-BHFL also raised an unsecured loan of Rs 96 crore (Rs 960 million) from IFC and securitised its portfolio with NHB for Rs 40 crore (Rs 400 million). This was seen as a step towards sourcing much more broad based and competitive funding to survive in the Indian market.