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Housing Finance in India High demand growth driven by: - Improved Affordability Rising disposable income lower interest rates. Acute housing shortage estimated at 24. Million units low mortgage penetration Key players: Banks and Housing Finance Companies. HDFC partners with NGOs having grass-root level involvement to identify families with genuine needs.
Housing Finance in India High demand growth driven by: - Improved Affordability Rising disposable income lower interest rates. Acute housing shortage estimated at 24. Million units low mortgage penetration Key players: Banks and Housing Finance Companies. HDFC partners with NGOs having grass-root level involvement to identify families with genuine needs.
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Housing Finance in India High demand growth driven by: - Improved Affordability Rising disposable income lower interest rates. Acute housing shortage estimated at 24. Million units low mortgage penetration Key players: Banks and Housing Finance Companies. HDFC partners with NGOs having grass-root level involvement to identify families with genuine needs.
Drepturi de autor:
Attribution Non-Commercial (BY-NC)
Formate disponibile
Descărcați ca PDF, TXT sau citiți online pe Scribd
JOINT MANAGING DIRECTOR HOUSING DEVELOPMENT FINANCE CORPORATION LTD - India
RESPONSIBLE DEVELOPMENT FINANCE
FRANKFURT FORUM 2008 FEBRUARY 22, 2008 Housing Finance in India • High demand growth driven by: – Improved Affordability • Rising disposable income • Lower interest rates • Tax incentives (interest and principal repayments deductible) – Increasing Urbanisation • Currently 28% of Indian population is urban – Favorable Demographics • Median Indian age is 25 years • Rapid rise in new households • Acute housing shortage estimated at 24.7 million units • Low mortgage penetration 2 • Key players: Banks and Housing Finance Companies Lending Operations of HDFC • Incorporated in 1977 as the first specialised mortgage company in India • Cumulative Loan Disbursements : US$ 35.9 bn • Cumulative Housing Units Financed : 3 million
• Loan Characteristics (for HDFC)
– Average Loan Size : Rs 1.25 mn (approx US$ 31,700) – Average Loan to Value : 63% (at origination) – Average Loan Term : 13 years – Primary Security : Mortgage of property financed – Customer Profile : Typically first time home buyers : Average age - mid 30s : Middle-class, salaried employees 3 Housing Finance for Low Income Clients • Following its 10th year of operations, HDFC created a ‘Shelter Assistance Reserve’ wherein a portion of profits are transferred each year for participating and supporting social initiatives • In 1989, HDFC accessed low-cost funds from KfW to expand lending operations to economically weaker section (EWS) households. • HDFC partners with NGOs having grass-root level involvement to identify families with genuine needs. • This collaboration has enabled HDFC to: – construct quality houses at lower costs (without contractors) – demonstrate high recovery rates – offer small sized loans for repairs & upgradation – emphasis on ‘self-help’ approach where the borrowers contribute locally available building material and labour • Focus is on providing housing + income generating activity 4 Challenges of Low Income Housing • Rapid urbanisation has created jobs in cities leading to migration from rural areas. But adequate housing facilities/infrastructure have not been provided resulting in proliferation of slums/squatters. • Archaic land policies • Supply side restrictions have led to land price distortions e.g. restrictions on FSI, development control regulations • Lack of a developed rental market • Lack of clarity on land titles • Financial inclusion still a challenge - low formal sector financial penetration with strong presence of the moneylender, charging usurious interest rates • Subsidised/free housing – political hot potato 5 Recent Initiatives • Repeal of Urban Land Ceiling and Regulation Act (ULCRA) in most states • Credit Bureau information building up • The Reserve Bank of India has put out guidelines for establishing Mortgage Guarantee Companies • Central government is providing funds to states for urban renewal and infrastructure development. Funds are released based on reforms implemented at the state level. • Efforts being made to redevelop slum settlements. Eg. Dharavi • Recognition that the micro finance sector is profitable. – Attracting huge capital, both debt and equity from venture capitalists, banks, corporates. – Global players expected to invest US$ 3 billion in micro finance in India by 2010 6 Reaching the Bottom of the Pyramid • Need to stipulate that all new housing projects should have a fixed percentage allotted for low income housing • Integrate delivery of services - water supply and sanitation, health care, education and access to livelihood • Policy initiatives to increase the supply of land • Incentivise developers to build rental accommodation or low cost housing • Encourage public private partnerships for low income housing • Standardise norms for low cost, ecological construction materials • Initiatives to lower cost to the end consumer such as reduced stamp duty • Government has set up a high level task force on “Affordable Housing for All” 7