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HOUSING

FINANCE
HOUSING+ FINANCE
 HOUSING –
GENERALLY REFERS TO THE SOCIAL PROBLEM OF
ENSURING THAT MEMBERS OF SOCIETY HAVE A HOME
IN WHICH TO LIVE, WHETHER THIS IS A HOUSE, OR
SOME OTHER KIND OF DWELLING, LODGING OR
SHELTER.
NEED
FINANCE –

IT IS A BROAD TERM THAT DESCRIBES TWO RELATED ACTIVITIES ;

THE STUDY OF HOW MONEY IS MANAGED AND THE ACTUAL


PROCESS OF ACQUIRING NEEDED FUNDS.

THE MANAGEMENT OF LARGE AMOUNTS OF MONEY ESPECIALLY BY


GOVERMENT OR LARGE COMPANIES.
HOUSING FINANCE
 IT IS A BROAD TOPIC,
THE CONCEPT OF WHICH CAN VARY ACROSS REGIONS AND
COUNTRIES, PARTICULARLY IN TERMS OF THE AREA IT
COVERS.
 HOUSING FINANCE BRING TOGETHER COMPLEX AND MULTI
SECTOR ISSUES THAT ARE DRIVEN BY CONSTANTLY
CHANGING LOCAL FEATURES SUCH AS COUNTRY LEGAL
ENVIRONMENT OR CULTURE, ECONOMIC MAKE UP,
REGULATORY ENVIRONMENT OR POLITICAL SYSTEM.
THE PURPOSE OF HOUSING FINANCE SYSTEM IS TO
PROVIDE THE FUNDS WHICH HOME BUYERS NEED TO
PURCHASE THEIR HOMES.
HOUSING FINANCE IS WHAT?
HOUSING FINANCE ALLOWS FOR THE PRODUCTION AND
CONSUMPTION OF HOUSING.
IT REFERS TO THE MONEY WE USE TO BUILD AND MAINTAIN
THE NATION’S HOUSING STOCK, BUT IT ALSO REFERS TO THE
MONEY WE NEED TO PAY FOR IT IN THE FORM OF
RENTS
MORTAGE LOANS
AND REPAYMENTS
NEED
• HOUSING BEING ONE OF THE THREE BASIC NEEDS OF LIFE
ALWAYS REMAINS IN THE TOP PRIORITIES OF ANY PERSON,
SOCIETY AND ECONOMY.

• A HUMAN BEING, AN INDIVIDUAL NEEDS HIS OWN SPACE


AND PRIVACY, WHICH CAN BE PROVIDED BY THE OWNERSHIP
OF A HOUSE.

• THE HOME IS THE BASIC UNIT OF THE SOCIETY.

• HOME PROVIDES A PLATFORM TO THE FAMILY


HOUSING FINANCE SYSTEM IN
INDIA
• FORMAL HOUSING FINANCE SECTOR IN INDIA HAD ITS
BEGINNINGS IN THE 1960S WHEN THE GOVERNMENT,
THROUGH ITS VARIOUS SCHEMES FOR PUBLIC AND LOW
COST HOUSING, WAS THE SOLE PROVIDER OF HOUSING
FINANCE.

• THE GOVERNMENT IMPLEMENTED MANY OF ITS SCHEMES


THROUGH STATE HOUSING BOARDS THAT ALLOCATED
SERVICED LAND AND HOUSING TO INDIVIDUALS BASED ON
SOCIAL WELFARE OBJECTIVES, NOT COMMERCIAL
CONSIDERATIONS.
• 1970 MARKED TWO SIGNIFICANT DEVELOPMENTS IN THE
HOUSING FINANCE SECTOR.
• A PUBLIC SECTOR HOUSING COMPANY, HUDCO, WAS
ESTABLISHED IN 1970, AND
THE FIRST PRIVATE HOUSING FINANCE COMPANY
(HFC), HDFC, WAS ESTABLISHED IN 1977.
TYPES OF HOUSING

DIRECT HOUSING FINANCE

 DIRECT HOUSING FINANCE REFERS TO THE FINANCE


PROVIDED TO INDIVIDUALS OR GROUPS OF
INDIVIDUALS INCLUDING CO-OPERATIVE SOCIETIES.

INDIRECT HOUSING FINANCE

 BANKS SHOULD ENSURE THAT THEIR INDIRECT


HOUSING FINANCE IS BY WAY OF TERM LOANS TO
HOUSING FINANCE INSTITUTIONS, HOUSING
BOARDS, OTHER PUBLIC HOUSING AGENCIES, ETC
HOUSING SCHEMES

PUBLIC PRIVATE

1. PRADHAN MANTRI AWAS YOJANA


2. JAN GHAR AWAS YOJANA

1. TATA HOUSING
2. ASHA AFFORDABLE HOUSING
3. SHAHABAD HOUSING YOJANA
4. ADITYA BIRLA HOUSING FINANCE
PRADHAN MANTRI AWAS YOJANA (PMAY)
LAUNCHED: 25 JUNE 2015
MAIN OBJECTIVE: ACHIEVE HOUSING FOR ALL BY THE YEAR 2022, 2
CRORE HOMES IN RURAL AREAS.

IS AN SCHEME OF NARENDRA MODI GOVERNMENT.


UNDER THE PMAY, THE GOVERNMENT AIMS TO PROVIDE ABOUT 5
CRORE AFFORDABLE HOMES TO THE PEOPLE BELONGING TO EWS
AND LIG CATEGORIES BY THE YEAR 2022. THERE IS A TARGET OF
BUILDING 2 CRORE HOMES IN URBAN AREA AND 3 CRORE IN RURAL
AREAS ACROSS THE COUNTRY.
UNDER THE SCHEME, THE GOVERNMENT WILL PROVIDE FINANCIAL
ASSISTANCE TO THE POOR HOME BUYERS, INTEREST SUBSIDY ON
HOME LOAN AND DIRECT SUBSIDY ON HOMES BOUGHT UNDER THE
SCHEME
UNDER PMAY, IT IS PROPOSED TO BUILD 2 CRORE HOUSES FOR
URBAN POOR INCLUDING ECONOMICALLY WEAKER SECTIONS
AND
LOW INCOME GROUPS
IN URBAN AREAS BY THE YEAR 2022 THROUGH A FINANCIAL
ASSISTANCE

THIS MISSION HAS FOUR COMPONENTS VIZ., IN-SITU SLUM


REDEVELOPMENT WITH PRIVATE SECTOR PARTICIPATION USING
LAND AS RESOURCE, AFFORDABLE HOUSING THROUGH CREDIT
LINKED SUBSIDY, AFFORDABLE HOUSING IN PARTNERSHIP WITH
PRIVATE AND PUBLIC SECTOR AND BENEFICIARY LED HOUSE
CONSTRUCTION.
THE HOUSES GIVEN UNDER THIS SCHEME WILL BE OWNED BY
FEMALES OR JOINTLY WITH MALES.
FINANCE
THE GOVERNMENT HAS APPROVED AN INVESTMENT FOR
CONSTRUCTION OF 6,83,724 HOUSES FOR URBAN POOR
INCLUDING CENTRAL ASSISTANCE COMMITMENT

FEATURES
THE FEATURES OF PRADHAN MANTRI AWAS YOJANA ARE THAT
THE GOVERNMENT WILL PROVIDE AN INTEREST SUBSIDY OF
6.5% ON HOUSING LOANS AVAILED BY THE BENEFICIARIES FOR A
PERIOD OF 15 YEARS FROM THE START OF A LOAN,
THE HOUSES UNDER PRADHAN MANTRI AWAS YOJANA WOULD
BE CONSTRUCTED THROUGH A TECHNOLOGY THAT IS ECO-
FRIENDLY,WHILE ALLOTTING GROUND FLOORS IN ANY HOUSING
SCHEME UNDER PMAY.
JAN GHAR AWAS YOJNA, SECTOR 1, GREATER NOIDA (WEST)
A FORTIFIED HOUSING SCHEME, BROUGHT UP AS “JAN GHAR AWAS
YOJNA”IS THE NEW AND THE SENSATIONAL PRE LAUNCHED PROJECT
IN THE FIELDS OF REAL ESTATE AT SECTOR-1 GREATER NOIDA WEST.
LIST OF TOP HOUSING FINANCE
COMPANIES IN INDIA

 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED


(HDFC)
 NATIONAL HOUSING BANK (NHB)
 STATE BANK OF INDIA HOME FINANCE (SBI)
 HOUSING URBAN DEVELOPMENT CORPORATION (HUDCO)
 LIFE INSURANCE CORPORATION (LIC )
 HOME FINANCE COMPANY LIMITED (ICICI)
 INDIAN HOME FINANCE LIMITED (IHFL)
 GENERAL INSURANCE CORPORATION OF INDIA (GIC)
 DEWAN HOUSING FINANCE CORPORATION LIMITED (DHFL)
 HOUSING FINANCE LIMITED (PNB)
CAN FIN HOMES LIMITED (CFHL)
ALL GIVES WIDE RANGE OF LOANS FOR PURCHASING HOMES, CONSTRUCTION,
RENOVATIONS, REPAIRS,
INTRODUCTION TO NATIONAL
HOUSING BANK (NHB)
 The National Housing Bank (NHB) was set up on July 9, 1988 under
the National Housing Bank Act, 1987 as the Apex level institution for
housing finance.
 To promote the housing financial institutions both at local and
regional levels.
 The NHB is wholly owned by the RBI which has contributed the
entire paid-up capital.
 Ensures a sound and healthy housing finance system through effective
regulation and supervision of housing finance institutions.

Functions OF NHB
Promotion and Development Function
Regulatory Function
Financing Function
OBJECTIVES OF NHB
 To promote a sound, healthy, viable and cost effective housing
finance system to cater to all segments of the population.
 To integrate the housing finance system with the overall
financial system.
 To promote a network of dedicated housing finance institutions
to adequately serve various regions and different income groups.
 To augment resources for the sector and channelize them for
housing.
 To make housing credit more affordable.
 To regulate the activities of housing finance companies based on
regulatory and supervisory authority derived under the Act.
 To encourage augmentation of supply of buildable land and also
building materials for housing and to upgrade the housing stock
in the country.
 To encourage public agencies to emerge as facilitators and
suppliers of served land, for housing.
PROMOTION AND DEVELOPMENT
FUNCTION
 NHB has designed and conducted the various
training programmes considering the need for
trained persons.
 The NHB also contributes to improve or
strengthen credit delivery network for housing
finance in the country.
 As a part of this role, NHB has framed a
scheme for guaranteeing the bonds to be
issued by the housing finance company.
 NHB operates as a multifunctional
Development Finance Institution (DFI) for the
housing sector.
CONTINUED….

NHB has been financing the following housing


schemes at all India level:-
 Indira Awas Yojna

 Golden Jubilee Rural Housing Finance


Scheme
 Bharat Nirman

 Productive Housing in Rural Areas(PHIRA)

 1% Interest subvention scheme


REGULATORY FUNCTION
 According to NHB Act, 1988, NHB is expected
to regulate the housing finance system of the
country to its advantage.
 To prevent any housing finance institutions
being conducted in such a manner which may
be against the interest of depositors or of the
housing finance institutions.
 For this purpose, NHB has been given power
to determine the policy.
 To give directions to the housing finance
institutions and their auditors.
FINANCING FUNCTION
 To provide financial assistance to various
banks and housing finance institutions.
 The financing of housing sector by the NHB is
done by extending refinance to different
primary lenders in respect of:
 Eligible housing loans extended by them to
individual beneficiaries.
 For project loans extended by them to various
implementing agencies.
 Acting as special purpose vehicle for
securitizing the housing loan receivables.
HOUSING URBAN DEVELOPMENT
CORPORATION (HUDCO)
 Housing Urban Development Corporation ltd.
established on April 25, 1970
 HUDCO is fully owned by the Government of
India .
 HUDCO plays a major role in implementation of
National Housing Policy.
 HUDCO offers housing loans for the
buying/constructing house/flat & Loans are also
offered for renovation/extension/alteration of
existing house/flat.
 It is one of the top financing company in India.
OBJECTIVES OF HUDCO
 Provide long term finance for construction
of house for residential purpose in urban &
rural areas.
 To subscribe to debentures & bonds
issued by the state housing & urban
development boards, trusts, authorities etc
especially for the purpose of housing.
 To administrate the amount received from
time to time, from Government of India (GOI)
and other sources for the purpose of financing
or undertaking housing and urban
development programmes in the country.
 To promote ,establish ,assist ,collaborate
and provide consultancy services for the
projects in designing and planning of works
relating to housing and urban development.
INSTITUTIONS PROVIDING HOUSING
FINANCE
 In India, the following types of institutions
provide long term finance for housing:
 Commercial banks- a bank that offers services to
the general public, companies & are the largest
mobilizers of savings in the country.
 Cooperative banks- A bank that holds deposits,
makes loans and provides other financial services
to cooperatives and member-owned organizations
& are apex level institutions of the state
cooperative credit structure.
 Regional rural banks- to serve primarily
the rural areas of India with basic banking and
financial services & are allowed to lend for
financing.
CONTINUED….
 Agriculture and rural development banks-
these are term lending institutions operating
exclusively in the rural sector & reaches out to
allied economies and supports & promotes an
integrated development.
 Housing finance companies- these are non
banking financial companies which should
form a major share of the company’s assets
 Cooperative housing finance societies-these
are specialized housing finance which is used
to support and help the housing needs of
community at large.
HDFC HOUSING FINANCE SERVICES

 HOME LOAN
 HOME IMPROVEMENT LOAN
 HOME EXTENSION LOANS
 LAND PURCHASE LOANS
LIC HOUSING FINANCE SERVICES

 PURCHASE OF FLATS/HOUSE
 CONSTRUCTION
 EXTENSION OF FLATS/HOUSE
 PLOT PURCHASE
 REPAIRS/RENOVATION TO EXISTING FLATS/HOUSE
 SBI HOUSING FINANCE SERVICES

 SBI SURAKSHIT HOME LOAN


 SBI YUVA HOME LOAN
 SBI HOME LOAN PAL ( PRE-APPROVED LIMIT )
 GRAM NIWAS
PURPOSE

THE HOUSING LOAN PROVIDED FOR;

 PURCHASE OF FLAT/HOUSE OR PURCHASE OF PLOT OF


LAND.
 FOR RENOVATION/REPAIRS OF AN EXISTING HOUSE/FLAT.
 FOR EXTENDING AN EXISTING HOUSE.
 SHORT TERM BRIDGE FINANCE WHILE PURCHASING
ANOTHER HOUSE/FLAT.
THE QUANTUM OF LOAN IS VARY FROM BANK TO BANK
NORMALLY
BANK STIPULATE MINIMUM OF RS.1,00,000/-.
THE MAXIMUM WOULD DEPEND ON THE BANK AND IT COULD
VARY FROM RS.10 LAKH TO RS.2 CRORE OR MORE.
ELIGIBILITY AND TERMS OF LOAN
 ALL INDIVIDUALS ARE ELIGIBLE WHO ARE ABOVE THE AGE
OF 18 YEARS HAVING SUFFICIENT INCOME TO REPAY THE
LOAN.
 THE LOANS ARE NOT NORMALLY EXTENDED TO THE
INDIVIDUALS WHO ARE ABOVE 58 YEARS OF AGE.
 THE AMOUNT OF ADVANCE WILL BE BASED ON
INDIVIDUALS GROSS PAY OR NET TAKE HOME PAY.
 THE CRITERIA MAY BE DIFFERS FROM BANK TO BANK AS
PER THE SUGGESTION OF RESERVE BANK OF INDIA (R.B.I.)
MARGIN, INTEREST, SECURITY

 THE HOUSING LOAN IS NORMALLY BETWEEN 80%TO85% OF


COST OF THE HOUSE/FLAT.
 SOME PRIVATE BANKS ARE NOW FINANCING100% AMOUNT.
THANK YOU