Shobha Roy

Housing finance company HDFC has witnessed a steady traction for loans under the Pradhan Mantri Awas Yojana (PMAY) to the economically weaker section (EWS) and low- and middle-income groups (LIG/MIG).

According to Renu Sud Karnad, MD, HDFC, nearly 38 per cent of the home loans approved in volume terms, and 19 per cent in value terms, have been to customers from the EWS and LIG segments.

“On an average, we have been approving 8,200 loans on a monthly basis to the EWS and LIG segments, with monthly average approvals at approximately ₹1,312 crore,” Karnad said in an e-mail response to a questionnaire sent by BusinessLine .

For the year ended March 31, 2018, loans to the EWS and LIG segments grew by 32 per cent and 41 per cent, respectively, over the previous year in value terms. The average ticket size of the loan to the EWS and LIG segments stood at ₹10.2 lakh and ₹17.4 lakh, respectively.

Growth to continue

The growth in offtake of loans under the scheme is expected to continue with rapid urbanisation, favourable demographics and the under-penetrated housing market acting as key growth drivers. This apart, higher disposable income, stability in property prices and attractive interest rates, will also contribute to the growth in the sector in the coming years, she said.

“There is a huge shortage in this segment. Under the PMAY scheme, a borrower is eligible for subsidy to the tune of ₹2.30-2.67 lakh, which effectively reduces the loan amount and allows first-time home buyers to avail more benefits,” she said. Apart from this, RERA will add more confidence in homebuyers, as it largely protects customer interest and will bring in greater transparency.

One of the key constraints has been the poor supply of housing units, particularly in Tier I cities.

According to Karnad, the difficulty in land availability and time and cost involved in obtaining building approvals from local authorities are the two prime reasons for this constraint.

Also, complying with RERA (Real Estate Regulation and Development Act) requirements had caused some disruption.

“However, the initial difficulties are fading away as developers are aligning themselves with RERA provisions. Even large or premium developers have also now got into affordable housing because of the recent incentives provided by the government,” she said.

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