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Pro-Poor Affordable Housing: Policy and Regulatory Strategies in India

This presentation by Lalit Kumar, Deputy General Manager of the National Housing Bank, highlights the critical housing shortage for low-income households in India between 2007-2012. With more than 97% of housing needs in urban areas and over 90% in rural areas unmet, the report underscores the necessity for new financial architectures and policy strategies to support affordable housing initiatives. Key recent initiatives such as the Jawahar Lal Nehru Urban Renewal Mission and various subsidy schemes emphasize the need for public-private partnerships. The future strategies aim to improve access to housing for economically weaker sections (EWS).

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Pro-Poor Affordable Housing: Policy and Regulatory Strategies in India

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  1. Pro-Poor Affordable Housing “Policy and Regulatory Strategies” By Lalit Kumar Dy. General Manager National Housing Bank New Delhi 29.10.2009

  2. Outline • Housing in India : The Context • New Initiatives • Policy and Regulatory Strategies

  3. Housing in India - The Context

  4. Housing Shortage during 2007-12 • In Urban Areas, more than 97% of the total housing requirement i.e. 25.73 million units required for poor and low income segment households (As per MH&UPA, GOI) • In Rural Areas, more than 90% of the total housing requirement i.e. 42.68 million units required for BPL Households. (As per Working Group Report on Rural Housing, MORD, GOI) • Average Per annum Funds Requirements during 2007-12 = Rs.1,20,00 crores Growth of housing finance is about 30% during last three years But, housing requirements for poor/EWS increased Need to not only develop New Financial Architecture but also Policy and Regulatory Framework for Affordable Housing on sustainable lines for poor/EWS

  5. Therefore, “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little”.

  6. Affordable Housing for poor/EWS Future Theme • Development of Market based Housing Finance System focusing on Unserved and Underserved segments • To bring appropriate changes in policy & regulatory framework • Catalyze Increased Investment through Private Sector Participation/Builders Objective • To reduce housing shortage for poor/EWS • To introduce customised housing cum income generating products for poor/EWS

  7. Recent Initiatives

  8. Recent Initiatives • Jawahar Lal Nehru Urban Renewal Mission (JnNURM) for bringing appropriate policy and legal reforms for providing affordable housing to poor/EWS • Interest Subsidy Scheme for Urban Poor • Top up Loan Scheme • Emphasis on Public Private Partnership focusing on housing for poor/EWS Thrust of Policy Initiatives : Affordable Housing

  9. Policy and Regulation Strategies

  10. …Future Policy and Regulatory Strategies For Poor/EWS Individuals/Families • Transparency in identification of beneficiaries under Govt. sponsored Schemes • Land be provided by Govt. Free of Cost/at affordable rates • Complete Waiver of Stamp duty on Registration on plot/house/flat • Restriction on resale/transfer of Land/House/Flat allotted to Poor/EWS for atleast for 10 years • Customised housing cum Saving linked/insurance linked/income generating loan products be introduced.

  11. …Future Policy and Regulatory Strategies For Government/Institutions • Government/RBI/NHB • Setting up of Risk Fund to cover housing loans to be given to Poor/EWS • Premium on such risk covers be borne by the Govt. • National Shelter Fund be set up for providing lesser cost refinances to FIs for such loans • A part of Insurance Funds be allowed to be tapped by Fis & such loans be classified as Investment in Govt. Securities • Risk Weight on housing loans to poor/EWS should carry lesser weight say 25% instead of 50% or 75% depending on LTV • The time limit for recognising such loans as NPAs be increased to 180 days instead of 90 days • Fixing of sub-targets within the ceiling of priority sector lending for poor/EWS

  12. …Future Policy and Regulatory Strategies • Public Agencies • Public Agencies should be strengthened to continue to acquire land and build houses/flats for Poor/EWS • Financial Institutions • Income from housing loan financed to poor/EWS be exempt from income tax and/or • The limit for creation of special reserve under 36 (1)(viii) be revised to 40% wherein specifying 20% from Poor/EWS financing • The benefit of Section 36(1)(viii) be allowed to banks also • FIs be allowed to tap funds from multinational agencies • Specific portion of long term funds from Insurance Companies be directed for poor/EWS housing to be raised by FIs • Risk Mitigants be introduced to cover smaller loans without any cost to FIs

  13. …Future Policy and Regulatory Strategies • Public Private Partnerships/Builders • Encourage housing projects with “High Volume –Low Margin” concept for poor/EWS • Conversion/Development charges or any other cess/charges levied by Govt. be waived • Additional FSI equal to Poor/EWS housing projects be allowed in other housing projects • No VAT/taxes on the building material used for Poor/EWS housing projects

  14. Thank You Visit us at : www.nhb.org.in

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