New Delhi: The World Bank will give $100 million assistance to the National Housing Bank (NHB) to help provide people on low incomes with easy access to housing finance, according to an agreement signed between the two on Wednesday.
The project, which will be implemented over five years, will provide access to sustainable housing finance for low-income households to purchase, build or upgrade their homes. Refinancing low-income housing loans is also an aim of the project.
There is a shortage of 18.78 million housing units in the country, 96% of it in the economically weaker section (EWS) and lower-income group (LIG) categories. The government classifies poor households in urban areas earning up to Rs.1 lakh per annum as EWS and households having an income between to Rs.1 lakh and Rs.2 lakh as LIG.
“This is a valuable project for us as it will not only strengthen our focus on low cost housing and provide lessons in scaling up further borrowing in the particular segment, but also showcase India as an example in this field in the global space,” said R.V. Verma, chairman and managing director, NHB.
Sixty percent of NHB loans of to Rs.17,500 crore in the financial year ended 30 June went to housing loans of up to Rs.15 lakh, according to Verma. This year the bank plans to lend Rs.20,000 crore, targeting 65% of it at units of up to Rs.15 lakh.
The project also aims to train employees at NHB, lending institutions and intermediaries; increase the number of primary lenders for low-income housing, as well as the number of borrowers and volume of loans; develop prudent lending standards to serve the more-vulnerable, lower-income households; and develop consumer information and disclosure norms for the project’s target groups.
“It is definitely a positive move, given the fact that there is an increasing need and demand in the low cost housing segment while house prices are increasing across segments,” said Chintan Patel, director of real estate and hospitality services at Ernst and Young professional services firm.
He said the low-income housing sector would be boosted by fresh funds “available and accessible at a reasonable rate”.
“It is the need of the hour because specific capital value for housing is increasing on the one hand, while on the other there is a liquidity crunch in the segment,” Patel added.
In addition, the housing and urban poverty alleviation ministry will soon be getting Rs.35,000 crore to implement three programmes related to homes for low-income families.
These programmes are: the Rajiv Awas Yojana for rehabilitation of slum dwellers; the Rajiv Rinn Yojana for providing interest subsidies on housing loans; and the Affordable Housing in Partnership Scheme to attract private housing companies.
NHB is also in talks with Britain’s department for international development about housing in poor states. It recently partnered International Finance Corp., a member of the World Bank Group, to set up the first mortgage guarantee company in the country, India Mortgage Guarantee Corp., which has received a licence from the Reserve Bank of India to start operations.