Ladies and gentlemen, good day and welcome to the Housing and Urban Development Corporation HUDCO Q2 FY 2026 earnings conference call, hosted by Elara Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Daptardar from Elara Securities. Thank you, and over to you, ma'am.
Very good evening to all of you. On behalf of Elara Securities, I welcome you all for Q2 FY 2026 post-earnings conference call of HUDCO. From the esteemed management, we have with us today Mr. Sanjay Kulshrestha, Chairman and Managing Director, Mr. M. Nagaraj, Director, Corporate Planning, Mr. Daljit Singh Khatri, Director, Finance, and Mr. Achal Gupta, General Manager, Finance. Without further ado, I now hand over the call to Mr. Sanjay Kulshrestha for his opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, sir.
Good evening. Good evening, friends, ladies and gentlemen. Thank you for joining the call. Let me start with the story of HUDCO that we had started two years back. Today, we stand at six monthly sanctions of around INR 92,985 crore, around INR 93,000 crore, which is the highest ever sanction in the history of HUDCO. Last year, during the same tenure, that is the H1 of the last year, we had achieved around INR 76,000 crore of the sanction. You can see there is a sea jump in the growth towards the sanction, and we had achieved around 22% of the growth in the sanction side. Now we are financing the entire gamut of the infrastructure which are covered under the harmonized list of Government of India.
Similarly, if you see the growth towards the disbursement side, last year during H1, we had achieved around INR 21,700 crores, and this year there is an announcement of around 19%, and we had achieved around INR 26,000 crores during H1. Around 19% is the growth towards the disbursement. Similarly, on the loan book side, if you see, we had grew up around 30% from INR 111,000 crores to INR 124,000 crores. We had INR 144,000 crores we had grown. If you see the H1, our growth is around 15.8%. As we always discuss that our growth will be more than 25%, we are maintaining our growth rate of around 30%. If you see the borrowing side also, it is very promising, and we had been able to sustain our growth towards reduction in the interest rate and to place us as a very competitive player into the financing of the infrastructure.
We had raised around INR 32,000 crore at the weighted average rate of 6.32%. The resources we had tapped are entirely from across the taps, starting from the foreign currency borrowing to domestic loans to domestic funds from the refinancing. Also, we had started our 54ec contributions in a very smaller way, but it is a very accelerated kind of deposits that we are getting. We had taken a lot of measures to cut down our cost of funds, including our hedging policies, our ECB borrowings in the yen-denominated. We had strategically placed our mechanism that how the loans will be taken, up to what kind of tenure it should be. Similarly, the bond, when and what kind of strategy we should be adopting by the issuance of the bond.
All these measures have contributed in reduction of cost up to 6.32%, and that makes us more competitive. Debt-equity ratio will remain very promising. We are under 7, so there is a lot of gearing that we can do towards the financing of the infrastructure as we have our pipeline, which is very strong. Revenue from the operation has also grown by 31% on a year-to-year basis. It has raised to around INR 6,100 crore from INR 4,700 crore in the similar H1 last year. There is a loan book growth. There is a decline in the blended cost of funds from 7.12% to 6.32%. Sorry, a decline in weighted average cost from 7.45% to 7.12%. Similarly, we had been able to resolve our NP assets also during the first year. There is a reversal of INR 120 crore in the ECL and recovery of around INR 339 crore.
Profitability has also increased by 7.55%, even though we are not compromised on the quality of the assets, and the scenario is very, very competitive in the country. Our gross NPA has reduced, and now it is only INR 1,750 crore, which is only 1.21%. We are very promising towards the net NPA, and now we are at net NPA of 0.07%. I would just like to say that we are committed that within 15 months of the time, we want to become a zero-NPA company, and all efforts we are making, whether it is resolution through the NCLT, DRT, DRAT, different legislative procedures, or through one-to-one discussions with the borrowers, understanding their issues. We are going to the board, and we have taken a mandate that we should be able to resolve these kinds of stress assets. We are working very hard towards monetization of our land banks.
We want to create space, rental spaces, so that it will contribute towards our bottom line, and we had a very dedicated plan for that kind of construction and enhancing our carpet areas. Similarly, if you see the NIM, if we exclude this EBR, which we had raised around INR 20,000 crore on behalf of Government of India, our NIMs are standing at 3.43%. Even though if we take care of this INR 20,000 crore, the NIMs are at around 3%. Similarly, spread on the same lines, it is 2.42% and 2.02%, including the INR 20,000 crore of the government. Similarly, ROE is also improved from the last quarter, and now it is 1.93%, and return on equity is also around 15%. If you see, we are maintaining everything, including the CAR ratio of around 38%.
We are placing the company at a level where there will be visibility, where we will be more competitive, where we will be clearing our books of our old NPAs and creating values through our monetization of the assets. Very recently, we had launched a different product, which is an urban infrastructure window, wherein we want to convert all the actions which are required for creation of the infrastructure in the ULBs, in the cities, in the states under the urban infrastructure, and a lot of collaborative activities that we are doing, and it will be resulting in enhancing the business volumes of the company. We are discussing with all the ULBs. The program will start from their capacity building, asset monetization, project preparations, and finally, the Government of India has announced this Urban Challenge Fund in the recent budget.
We are targeting the funds, the loans required for the Urban Challenge Fund through this Urban Invest Window. Urban Challenge Fund will become a bigger subset of Urban Challenge Urban Invest Window. Similarly, on the same lines for diversification of our businesses, we had started the private sector business in all five sectors that we were discussing from last one year. After a lot of discussions with the stakeholders, we are opening up to the private sector in five sectors. One is the port, second is the airport, third is the road, fourth is the energy, and fifth is the real estate, which is our niche sector.
There is no target for the power sector as of now because we believe that entity should be strong, it will be investable rate, and similarly, the projects should be backed by concessionary agreements, strong concessionary agreements, and in some cases, in other cases, it should be backed by some regulatory revenue flows. Thank you so much. Thank you for joining. Yeah.
Sir, should we open the floor for questions?
Sure.
Thank you very much. We will now begin with the question-and- answer session. Anyone who wishes to ask a question may press star and then one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then one. Our first question comes from the line of Roshan Men, an investor. Please go ahead. Roshan, sir, your line is unmuted. Please proceed with your question. Mr. Roshan Men, if you have unmuted the line from your end, please unmute and proceed with your question. Roshan, sir, we are not able to hear you. If you can hear us, please rejoin the queue again.
A reminder to all the participants, if you wish to register for a question, you may press star and then one on your touchstone phone now. Our next question comes from the line of Mohit Oza from Elara. Please go ahead.
Yeah, hello, sir. Thank you for the opportunity. Sir, I have two questions. First is, what would be the risk evaluation and underwriting criteria for approving the private loan? And second, if you could tell us about your loan growth guidance. Thank you, sir.
Yeah, thank you, Mohit. Regarding the private sector, we will be going with the best practices available in the market. We will be very, very vigilant regarding the quality of the assets since we are starting this private sector after 12 years of the time frame. Initially, the bankability of the project has to be seen, and the investment grade of the entity has to be seen. It will be a two-graded approach for the appraisal, and for monitoring, it will be a three-graded approach. We will be taking supports from the PMC also to take care of the project progress and the quality. The entity should be at least IR1, IR2, and IR3. First three integrated rating, we will be catering the loans. It will be an integrated rating of entity and the project.
The process is very stringent so that there should not be any doubt regarding any NPA or that kind of this thing. Initially, till the time our capability is enhanced, we will be taking support of the external consultants parallelly who will appraise the project in line with our guidelines. This is number one. Second is the guidance on the loan. As we already discussed, it will be + 25% that we are maintaining, and I do not see anything to obstruct this path of 25%. It will definitely be between 25%-30% that we will be maintaining. Now, since these two products are also added in our portfolio, that is the private sector and this Urban Invest Window, I think they will be working as a catalyst towards the growth of the company.
Okay, sir. Thank you for answering in detail. All the best.
Thank you. Participants, to register for a question, please press star and then one now. Participants, you may press star and then one to ask a question. Our next question comes from the line of Rati Pandit from Nirmal Bang Institutional Equities. Please go ahead.
Yeah, thanks for taking my question. My first question is regarding the outstanding sanctions that we are having, which could be, I mean, which could get converted into disbursements in the coming time. That is one. Secondly, our outlook on the margins. I mean, last quarter, if I remember, we had mentioned that our growth was back-ended in the first quarter because the NIMs were not that, I mean, not that great in the first quarter. Now, also, we are seeing that we are having around 3% NIMs, excluding the EBR portion. What is our outlook on the margins? I mean, if we can expect some improvement over a year. My third question is regarding the, I mean, with respect to the remaining NPAs in consortium and outside that, what are the resolution plans?
Yeah.
You had asked three questions.
Yeah, first is regarding the sanctions.
Yeah. The sanctions process starts from the signing of MOUs. We have outstanding MOUs signed up to the extent of around INR 700 billion-INR 800 billion. This is number one. The documented schemes are also around INR 200 billion, which will be converted into the disbursement. Non-documented, another INR 100 billion schemes, the projects which are there, which need a loan agreement and documentation, which are at several stages. We have a clear pipeline of around INR 300 billion of the sanctioned projects, out of which INR 200 billion have already been documented, agreement has been done. INR 100 billion at various stages, and we are discussing regarding the documentation. This is number one. You had requested regarding the profitability.
I think we are maintaining our profitability in line with our guidance that is around 2% of the spread and 3% of the NIM, irrespective. If you see, there is a lot of fluctuation in the international market, and we are making some expenditures towards that, and because of that impairment reserve, some loss of profit, you can say. The profits have come in this quarter to slightly lower. Finally, because of the loan book announcement, we had been ably managed to have their labels of these spreads and the NIMs. Similarly, regarding the resolutions, yes, this year, we had resolved many projects, but there are many which are in pipeline, and we are very aggressive towards resolutions of our assets. In quarter three, also, we are targeting around INR 200 crore of the resolutions which are in the advanced phase.
Actually, what happened in the resolutions because resolution, we are on the one side, other side is the borrower, and third side is the legal proceeding. Sometimes, it is very difficult, even though you are very aggressive to have that kind of timelines on quarter-to-quarter basis. Definitely, in this financial year, I think a lot of resolutions will come.
Okay. That's it from my side. Thank you.
Thank you.
Thank you. Participants, you may press star and then one to ask a question. A reminder to everyone, if you wish to register for a question, please press star and then one. Our next question comes from the line of Sunil, an investor. Please go ahead.
Yes, my question is related to the forex fluctuation. I just want to understand the currency fluctuation, especially in terms of dollar. Do we have such kind of borrowing which can affect our margins in short run and long run?
Yeah, sure. Our Director, Finance will be answering this question.
Yeah, good evening. I'm Daljit Khatri. We have two kinds of foreign currency borrowings. One is FCNR, those having maturity up to one year, and then we have external commercial borrowings having maturity of five years. As far as the external commercial borrowings are concerned, which are around INR 9,900 crore, we have taken adequate protection by way of single options, and we are very much within the protection levels. We have some foreign currency FCNR loan also, which are having tenor up to one year. There, the volatility is more, and there we have some losses we have booked in the last two quarters. Now, we have protection for the remaining FCNRs. We have taken the protection levels by way of single options, and we have also taken additional protection by way of EKI, which gives another protection of another 4%-5%.
We are also monitoring the levels of USD/INR and USD/CHF on a day-to-day basis, and we are taking the suitable remedial action as and when required.
I would also like to add, we all know that this is a very disturbing year as far as this currency fluctuation is there. From the last six months, seven months, we had seen how the CHF has gone strengthened and how the dollar is moving. I am very happy that we are having some issues in the FCNR, which we are taking all the mitigation help. On the dollar side, which are long-term loans, five-year loans, we did not have any problem, and sufficient protection levels have been taken. We will be sorting out this CHF issue by this margin. We will not be creating another FCNR obligation on the company now.
Thank you. Just to add on to understand, could you just quantify how much impact we were having due to this fluctuation in terms of PAT, in terms of percentage, I would say?
Yeah. In the H1 2025-2026, we have incurred a loss of around INR 176 crore as compared to zero loss in the H1 of 2024-2025. Most of my FCNR, I mean, more than 50% of my FCNR stands matured, and now around 30%-40% of FCNR is remaining, which will get matured by February, March, coming February, March, that is Q4. After that, we do not have any FCNRs to mature in the next financial year.
Thank you.
Thank you. Our next question comes from the line of Nemin from GeoJit PMS. Please go ahead.
Yeah, hi. Thanks for the opportunity. Firstly, just wanted to get an idea as to what debt-to-equity levels would we be comfortable at since we are growing at upwards of 25%-30%. What would be the debt-to-equity levels that you would be looking at?
I think as far as RBA regulations are concerned, there is no limit for that. Yes, there are covenants when we borrow from the external markets, and that covenant is 10. It is far off to achieve that 10. I think now we are at sub-7 of that equity ratio. We had done our mathematics for this growth, and we will be around 8. We will be there. That equity ratio will be maintained at around 8. In the meantime, we are also planning to have some perpetual debt, and we will be going to the market maybe in the third or fourth quarter, depending on the market conditions. It is not an emergent need, but yes, you are right in our plan of action. This is also one of the matters that we need to resolve at an appropriate time.
Okay, sir. Got it. Secondly, sir, on your yields, what would be our incremental yields, disbursement yields?
See, if you see the yield in the markets are coming down, the repo is coming down, and we are expecting further rate cuts. Now it is around 2%, and I think that will be maintained. That will not be.
Okay. Okay. So.
And.
Yeah, sorry.
Yeah, please. Regarding the yield, it's around 9%, 9.21%. Even though the market has come down, our cost of funds has come down, we have been able to sustain that kind of yield of around + 9%, 9.2%.
Okay. Okay. So what portion of our book would be fixed? I mean, is there any portion of our lending book that would be fixed in nature?
Sorry?
Fixed rate of interest?
There is no fixed, actually. If you see, everything is floating after a year. All our loans are one-year reset, and there are some loans, may not be 2%-3%-4% more than that. They are fixed for three years, and then the reset is done. It is a win-win approach as an NBFC. On our lending side, there is a reset on the day the repo cuts come for domestic loans. The transfer or transmission of that rate cut comes at the time of one-year reset.
Okay, sir. Got it. Got it. Sir, when we look at our now, when we are venturing into the private side of the market, would our yields be at similar levels, or would it be at a higher level? What sort of competition do you foresee in this market?
Actually, there is no straight line answer for this, but yes, at least these levels will be maintained. Finally, it depends on what kind of rating that the project is getting. If it is IR1, it will be very competitive because of the asset quality and the type of entity. If it is IR3, yes, of course, it will be higher. Similarly, on segment-to-segment, if it is a HEM project backed by strong concessionary agreements, the rates will be different. If it is loosely bound kind of concessionary agreement, but it is in IR3, then the rate of interest will be different.
Got it, sir. Got it. Next, on your NIMs, when you say that 3%-3.3% NIMs could be maintained, is there any fixed percentage of fee that certain products are being charged? Is there any particular benchmark that is supposed to be charged over and above your yields?
Yeah. For private sector, we had adopted the practice that is processing fees and legal fees. All these fee structures will be there. We do not want to overburden our product. Rather, we do not want to compromise on the quality of the assets. These fees or these kind of things will be as minimum as possible. We will remain competitive. We are not taking these kind of things as our life.
Perfect. Perfect. Lastly, sir, just to get an idea, what would be our sanctions to disbursement lag, I mean, time lag between sanctions to disbursement?
Starting from three months to one year.
Starting from three months to one year. Okay. Okay, sir. Got it. Got it. Lastly, sir, on your PMAY thing, would you like to comment anything that we will be seeing any disbursement coming in the second half of this year, or will it be in FY 2027? Any thoughts or comments?
I cannot comment on the time of disbursement, but as of now, we had no sanction. No state has come forward to take the loan against the counterpart requirement of that state.
Perfect. Thank you. Thank you so much. That's it for my side. Thanks a lot.
Thanks.
Thank you. Our next question comes from the line of Gaurav Kochar from Millennium. Please go ahead.
Yeah. Hi, sir. Good evening. Thanks for the opportunity. Sir, I have a few questions. Firstly, on the forex loss in this quarter, you mentioned that now the hedging process has changed. Maybe if you can highlight till what level of maybe for both the currency, both USD/CHF and USD/INR, till what level are we protected from here? Just hypothetically, if the currency were to depreciate another 3%-4% from here, are you still protected in terms of will you still see loss in the P&L, or will you not see any loss in the P&L?
Yeah. Our Director, Finance will be answering that.
Yeah. Good afternoon again, Daljit Khatri this side. Yeah, we have around $400 million of FCNRs coming for maturity in Q3. Out of that, $175 million is in November itself. Remaining will be in December. The protection levels, as of now, all three are in the, I mean, within the limits. As far as dollar is concerned, USD INR is concerned, they are above 89. USD CHF are also around 79. Yes, protection levels, all these deals are presently within the protection levels. Going forward, seeing the volatility, we are taking alternative measures. We are trying to partially unwind some of them and taking the full hedge again by bearing cost. Because if I leave it unattended, it may lead to a loss, a higher loss.
If I unwind and take unlimited protection again, it will lead to a saving of around 50% of what the potential loss could be. We are, on a day-to-day basis, monitoring the situation and taking the extra protection as and when it is felt appropriate.
Sure. Sir, if the currency remains at the current levels, there will not be any loss in the coming quarter. Is that a fair sort of assessment?
Yes.
As of now, if it does not further deteriorate, that is why we are doing it monitoring on a daily basis. Wherever required, we are trying to take some additional protection at some additional cost so that the loss minimization can take place.
Right. Understood. Perfect. Perfect. Thank you so much, sir. Sir, my next question is with respect to the sanction to disbursement that you mentioned. Given that this quarter, we saw a very strong sanction. Our first half sanction is already INR + 90,000 crores . Maybe if you can highlight, and with overall pipeline you mentioned is very strong, what kind of disbursement are we looking at for this year? Given that INR 50,000 crores was the guidance, we are more than half already in the first half.
With a very strong sanction in Q2, the second half, do you expect to better the INR 50,000 crore number that you have guided?
As a principle, we had taken a position that as far as possible, we will try to spread our disbursement on a quarter-to-quarter basis. I'm very happy that we are trying to maintain that. If you see the last year pattern, also it was evenly distributed quarter-wise, and we had achieved INR 40,000 crore. This year also, more or less, it is evenly distributed disbursement on a quarterly basis. In the first quarter, it was INR 11,000-INR 12,000. Then we had slightly increased in the quarter to slightly better than that. Now we stand at INR 25,000 crore. For this year, we have a target of INR 50,000 crore of the disbursement, out of which in the first half-yearly, we had achieved 50%. The target is 50%, which is a growth of around 25% on a year-to-year basis. I'm very sure that this INR 50,000 crore will be achieved with this committed pipeline.
Understood. And sir, with respect to the AUM growth, if the sanction or the disbursement will be INR 50,000 crore, the AUM growth can be 30%, which is the number you have reported this quarter as well. Going forward, if the sanction pipeline is strong, what kind of growth are you expecting for FY 2027?
Two years back, we had targeted that by March 2026, our loan book will become INR 1.5 lakh crores. We had already achieved INR 1.44 or 1.45 lakh crores. It is a statement that we will be achieving this INR 1.5 lakh crores by March. That is why we had revised upper side, and we have now revised to INR 1.6 lakh crores. For FY 2030, we have a target that it will become INR 3 lakh crores of the loan book. It may be around twice within the four years. You can see that we have to grow at around 25%-26%, then only we can be able to achieve that kind of target.
Okay. Maybe in FY 2027, 25% growth looks possible. 25% plus growth looks possible, even for FY 2027.
Yeah. I think with these kind of sanction guidances, it's achievable. 25%-27% of the growth is achievable.
Understood. Sir, my next question is on margins. In the last quarter, you mentioned that margins will expand and probably go towards 3.1%-3.2% marks. This quarter, we already have seen improvement. If I look at just this quarter, there was an eight basis point kind of an improvement, but still lower than what you had guided. Maybe in the second half, with cost of fund coming down, you have indicated that the incremental cost of fund is at 6.32. With all these measures, what do you think the second half margin trajectory could be? Can we get closer to the 3.1%-3.2% sort of range that we were there earlier in the second half of last year?
Yes, definitely. Definitely, we will be achieving. Actually, if you see the NIMs has slightly down because the resolution has not come in that particular quarter. If you compare the last on year-to-year Q2 of the last financial year, we had got income of more than INR 200 crore after resolution of some of the assets. This year, it is only INR 16 crore around. INR 16 crore is the.
Recovery.
You see, around INR 200 crore we had lost on account of recovery. Or you can say it has not been added into our income and enhanced our NIMs. I am sure that in quarter three, we will be able to get that kind of momentum, and we will be easily achieving the NIMs of more than 3.1%. At the same time, we are also expecting that repo will come down by at least 25 basis points in December. Monetary policy, which will further extend, further reduce our expenditure on the interest expenditure.
Okay. So 10 basis point improvement in Q3 is what you're expecting in terms of margin?
Yeah. Yeah. Definitely. At least 10 basis points.
Sure. Sure. And sir, just the last point that you mentioned regarding the resolution and the interest recovery on that, you also alluded to there are certain accounts which are under advanced stage of resolution. Maybe if you can, what is the quantum of asset and what would be the recovery rate? Since we are already almost 95% provided on majority of the loans, will that entire recovery come on the P&L in the form of maybe interest income or provision reversal?
See, around 10 projects we had identified for resolution in quarter three and quarter four. Total NPA resolution of around INR 730 crore of the principal. And we are expecting a recovery of around INR 900 crore. That is our plan on which we are working. If we at all be the success rate of 50%, then also it will be around INR 400 crore-500 crore kind of amount.
Got it. So 10 projects worth INR 730 crore are in advanced stages of resolution, and you expect this in Q3 and Q4. The timing could be different, but at least by end of this year, you expect this to get resolved. Sure. And sir, by end of FY 2027, you've guided.
We are targeting.
Right.
Yeah. Recovery of INR 900 crore, we are targeting around 50% of the revenue should come in at two of this financial year and then in the next financial year.
Right. Understood. So INR 450 crore would come in this financial year itself.
Yeah. We are making all-out efforts.
Sure. Sure, sir. And sir, you mentioned that in 15 months' time, you would become a zero NPA sort of. That was for gross NPA, right? Gross stage three will become zero in 15 months.
For net NPA that I'm talking, it's for the net NPA for which we had already achieved 0.07%.
Okay. Okay. Okay. That was for net NPA. Sure. Sure, sir. Sure. Sir, any incremental risk of any slippage, any account which is showing stress? If you can give some data around your stage two, if there are any accounts which could come in stage three in the next couple of quarters. Any risk that you see?
Actually, if you see, our asset quality is very strong. Around 90% is backed by the state government guarantees. There may be a provisional delay of a few days only, but I do not see any risk towards the recovery. From last three years, there is no NPA or no that kind of signs given by the states. The states are very prudent in planning in their capital expenditure now.
Right. So no risk that you are seeing of any accounts slipping into NPA in the next couple of quarters?
No. We are not.
Great. Great. Sir, and sir, just one last question from my side regarding this Urban Invest Window that you indicated. Maybe you can throw some light on the size of the opportunity and as the organization, what kind of, maybe in FY 2027 or over a medium term, what kind of opportunity do you see yourself participating in this loan? Whether this new opportunity would be with similar spreads as we currently hold, or will it be at a higher spread?
I think we are repurposing the business of the HUDCO in line with the objective of the Government of India of Viksit Bharat 2047. Just 22 years are left for that target. For any country to become a developed city, you know, cities are the face of that country. We are identifying 50 odd cities which will come to the global standards, and we are discussing with our ministry and the government. Huge funds are required, and we had seen the studies around INR 8 trillion of the funds are required till 2036. If you see, around INR 500 billion-INR 800 billion of the funds are required on a year-to-year basis. Presently, we are expanding around INR 250 billion on a yearly basis, a part of which is coming from the Government of India and state government and HUDCO and other financial institutions.
Accelerated growth is required. With this perspective, this UI window is a very proactive initiative of HUDCO and the Government of India, wherein it will be the business, it will be the loan growth, but at the same time, the capacity building, the absorption capacity of the urban local bodies, the cities, the states. We will be working from three fronts. One will be the capacity building, and we have our institutions. There will be a big program which will be supporting the states. It will be the asset registers, maintaining of the asset registers and converting these assets into the bankable project. Third will be the financial closure. HUDCO will be doing the financial closure and taking the help of the multilateral institution for that to spread the best practices.
It is a very inclusive kind of step that HUDCO has taken. Definitely, the loan book will be strong, the asset quality will be strong, and there will be an accelerated growth in the loan book in line with the national objectives.
Sure, sir. Specific to this, any numbers internally maybe you have targeted or budgeted for next year under this program? Any sort of numbers that you can share that will be helpful?
Definitely. Definitely. You may be knowing that the Urban Challenge Fund has been launched by the Government of India in the budget speech of under the finance minister. INR 1 lakh crore will come from the central government as a subsidy. INR 1 lakh crore has to be arranged by the state government. We are targeting INR 1 lakh crore of the state government requirement. That will be one part of INR 1 lakh crore that is a business potential for HUDCO. INR 2 lakh crore has to be arranged by the PPP players. Now, since we are starting this private sector also, that can also be a potential opportunity for HUDCO to grow.
Okay. Sir, under how many years or total how many years will this entire INR 1 lakh + INR 2 lakh be sanctioned or disbursed over what time period?
Sanction will be done, I think, within one year or so, 18 months of the time. The disbursement will take another two to three years of the time.
Okay. Understood. That is very helpful, sir. Just on the spread, will this incrementally be at a similar spread, higher spread, lower spread versus what you are currently holding?
Actually, if you see, the HUDCO belief or our mission, we doesn't load our projects with a lot of spread. So we will be maintaining our current rate of + 2% of the spread and + 3% of the NIMs. Because we want finally the projects should sustain the repayment. It should be viable, sustainable, and bankable.
Understood. I think very, very helpful, sir. Thank you so much. That is it from my side. All the very best.
Thank you.
Thank you. Next follow-up question comes from the line of Mohit Oza from Elara. Please go ahead.
Yes, sir. Thank you for allowing me a follow-up question. Sir, just again, if you could give additional details on this Urban Invest Window and some color on the overall sanctions pipeline. Thank you, sir.
Overall sanctions pipeline is already very strong, and I think the same pace will be maintained in a couple of years. A lot of opportunities are there. Urban Invest Window, actually, if you see, it's a comprehensive approach towards creation of the asset in the entire country. We are talking about the bankable projects. If we are talking about any bankable project in urban infrastructure sector, I think HUDCO is the only sector-agnostic company which will be looking upon. We are under the Ministry of Housing and Urban Affairs, which is looking after all the urban affair projects. We are getting that kind of natural benefit. As I had already spoken, this window will work in three phases. One is the capacity building, another is the asset mapping and making the assets bankable, and third is the financial closure.
A lot of push will come in a very financially prudent manner. Projects will be implemented in a very accelerated manner. It will be a convergence of a lot of things. If you see, the consultants, there will be transaction advisors, there will be capacity-building kind of institutions, there will be multilateral banks, issuance of the bonds. We will be taking care of a lot of things and creating value in our work.
Okay, sir. Yes, that's helpful, sir. Thank you, sir.
Thanks.
Thank you. Sir, no further questions. I would now like to hand the conference over to the management for closing comments.
Thank you, friends, for joining. It is a wonderful discussion and a lot of takeaways we had taken from your questions. I can assure you that our growth story is not temporary. Whatever we are saying and we are believing, that is being translated as you may have witnessed. In the same way, we will be catering to our responsibility as a listed company. Rest assured that our names, our spreads will go on in the same manner, and business growth will always be there. There are a lot of opportunities within the country. If you see, the Housing for All program is there, AMRUT 2.0 is there. We are also trying to start how we will be funding these metro projects, and we are working with a lot of multinational institutions. I will not talk in length about that.
What I can tell you is that the potential is enormous. As a company, as a sector-agnostic company, the 75% stakeholder by Government of India, a strategic company in the action plan of the government, we have a lot of roles and responsibility across creation of the urban infrastructure for Viksit Bharat. That is my assurance, my team's assurance that next quarter we will be again meeting and we will be talking about the same growth story. Thank you so much.
Thank you. On behalf of Elara Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.