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Housing finance institutions and banks will soon find it easier to extend loans to small borrowers and the affordable housing segment. The National Housing Bank has adopted a multi-pronged approach to supporting small loans, according to its Chairman and Managing Director R.V. Verma.
As the apex bank, regulator and refinance institution for the housing finance sector, NHB has in the pipeline a range of support schemes, including the ongoing credit risk guarantee fund trust for low income housing for loans up to Rs 5 lakh and the expanded Rural Housing Fund which, in the current year, will be Rs 6,000 crore compared with Rs 4,000 crore in 2012-13.
Verma, who was in Chennai to finalise agreements with a number of housing finance institutions to participate in the Credit Risk Guarantee Fund Trust for Low Income Housing, said housing loans up to Rs 5 lakh account for about 8 per cent of the total housing loan portfolio of Rs 1.10 lakh crore.
Housing fund soon
He said the Rs 2,000-crore Urban Housing Fund announced in the Union Budget will ‘very soon’ be in place to help home loan institutions lend to the affordable housing segment, particularly in small towns and cities.
While the details are being finalised, it is likely to support housing loans up to Rs 10 lakh to be lent to purchase houses of up to Rs 16 lakh. The popular norm for this segment is houses of about 60 sq m, he said.
NHB is also awaiting the go-ahead from the Reserve Bank to start the India Mortgage Guarantee Corporation in partnership with International Finance Corporation, Asian Development Bank and the US-based insurance company Genworth Insurance.
This will be run on purely commercial principles to cover housing finance.
Mortgage guarantee initiatives such as these at various levels will instil confidence in housing finance institutions to cater to all segments. In turn, this will increase investments in housing sector, a key factor in growing the economy.
NHB has disbursed Rs 17,300 crore for the nine months as of March-end and is confident of achieving the Rs 18,000-crore target for the year ending June 2013.
This will include the Rs 4,000-crore Rural Housing Fund, of which Rs 3,500 crore has been utilised, he said.
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