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Boost for affordable housing

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The Hindu        30.05.2015

Boost for affordable housing

National Housing Bank’s special urban housing refinance scheme extends a helping hand to low-income urban households, writes K.A. Martin

The National Housing Bank (NHB) has come out with a special housing refinance scheme for low-income households in urban areas leveraging a $100-million loan from the International Development Agency (IDA).

An NHB document on the new scheme said that refinance would be provided to primary lending institutions on the basis of their loans to low-income urban households for building, purchasing, or renovation of houses. These loans must be secured through collateral property or in another way.

Urban households with an annual income not exceeding Rs.2 lakh are eligible for benefits under the new scheme. The loan amount should not exceed Rs.5 lakh. It is also a must that the beneficiaries have income from the informal sector. The loans should have been disbursed either on or after February 25, 2013. The loan-to-value ratio must not exceed 80 per cent.

The NHB has also said that the benefits under the new scheme should be extended only to projects that conform to the prescribed social and environmental due diligence requirements.

Introducing the new scheme, the NHB document said that the housing finance market in the country had developed at a robust rate over the last 25 years. There are numerous large, small, and medium-sized housing finance companies spread across the country. Besides, commercial banks, regional rural banks, and urban cooperative banks too provide loans for housing purpose, making the market vibrant.

However, the NHB document noted that most of the growth in the housing finance sector took place in the upper- and middle-income groups. Low-income groups still have little access to housing finance from the formal sector.

The situation has led to shortage of houses in the low-income group. A study by a technical committee appointed by the government on housing requirements in the country said that there was a shortage of 17.84 million houses in the country (2012) in the urban areas among the low-income or economically weaker groups.

Taking the situation into consideration, the government is working to achieve housing for all by 2022.

The NHB states that the benefits under the new scheme should be extended only to projects that conform to the prescribed social and environmental due diligence requirements