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New Delhi 29.10.2009

Pro-Poor Affordable Housing “Policy and Regulatory Strategies”. By Lalit Kumar Dy. General Manager National Housing Bank. New Delhi 29.10.2009. Outline. Housing in India : The Context New Initiatives Policy and Regulatory Strategies.

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New Delhi 29.10.2009

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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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