HOUSINGHOUSING FINANCES IN INDIA

• Housing finance in India has traditionally been and is receiving low priority in policy formulation compared to other sectors.

• By international standards, housing finances constitute a small portion of the gross domestic product(GDP)

• However a number of finance companies, both public and private has increased and the rate of housing has also increased.

• Some of the main financing companies are national housing bank, micro housing finance corporation, housing development finance corporation, LIC , HUDCO and many other private companies.

Housing Finance Market Classification

HOUSING

FINANCE

MARKET

Banks Public Sector Banks

Private Sector Banks

Foreign Banks

Housing Finance

Companies

Development Financial

Institutions, Co-op Housing

Societies

Micro Finance Institutions

Insurance Companies

LIC Housing Finance, GIC Housing Finance etc.Key Players providing Home Insurance: New India Assurance, National Insurance, ICICI Lombard, Bajaj Allianz, IFFCO-TOKIO, Tata AIG etc.

DHFL, HDFC, GRUH, Indiabulls Housing Finance, Reliance Housing Finance, Sundaram BNP Paribas, Religare Housing Development Corp etc.

HUDCO, NABARD, SIDBI, Apex Co-operative Housing Federations, State Co-operative Agriculture and Rural Development Banks etc.

Micro Housing Finance Corporation, MAS rural housing and mortgage finance etc.

SBI, Bank of Baroda, Canara Bank, PNB, Dena Bank, Bank of India etc.

Standard Chartered, Citibank, HSBC etc.

HDFC Bank, ICICI Bank, Axis Bank, ING Vysya Bank etc.

NATIONAL HOUSING BANK

NATIONAL HOUSING BANK

• The parliament passed the 'National Housing Bank (Amendment) Act, 2000' which has come into force from 16th June 2000. • The need for a summary procedure was long felt for housing

finance institutions for giving impetus for creation of 'Secondary Mortgage Market'.• The National Housing Bank (NHB) was established on 9th July

1988 under an Act of the Parliament viz. the National Housing Bank Act, 1987 • to function as a principal agency to promote Housing Finance

Institutions and to provide financial and other support to such institutions. • Wholly owned by the Reserve Bank of India.

OBJECTIVES

• To promote a sound, healthy, viable and efficient housing finance system to cater to all segments of the population.• To support housing finance institutions through financing and

capacity building measures.• To catalyze flow of funds to all regions and incomes groups.• To develop market infrastructure for sound growth of housing finance

system.• To ensure expansion and stability in the housing finance market.

IDEOLOGYMISSION To harness and promote the market potentials to serve

the housing needs of all segments of the population with the focus on low and moderate income housing.

VISIONPromoting inclusive expansion with stability in housing

finance market.

Business Activities

• NHB, as the Apex level financial institution for the housing sector in the country, performs the following roles:

1. Promotion and Development2. Regulation and Supervision3. Finance4. Resources of NHB5. Rural Housing6. Recent Initiatives

Role OF NHB

Augmenting Resources for the housing sector

Leveraging the liquidity

Support specialized institutions to serve as dedicated centers for housing credit

Fill the credit gaps suffered by low income households by strengthening linkages between formal and informal sector.

Strengthening linkages between formal and informal sector institutions - Financing MFIs

FUNCTIONS

Promotion

Financing

Financing• Refinance to

HFCs and Banks• Direct Finance

to MFIs, Public Agencies

• Special Finance Schemes for affordable housing

Regulation of HFCs through • Registration

• Prudential Norms

• KYC Norms

• Grievance Redressal

• Supervisory oversight and building confidence in the sector by On-site and off-site surveillance

Promotion • Setting up of institutions

• Developing secondary mortgage market and linking it with capital and other markets in financial sector

• Other products such as RML, RMLeA etc

• Providing equity support

• Formulation of Housing Price Index

• Capacity Building of HFC sector

MICRO HOUSING FINANCE CORPORATION

MICRO HOUSING FINANCE CORPORATION (MHFC)• Micro Housing Finance Corporation (MHFC) is a housing finance company

headquartered in Mumbai, India, focused on providing micro-mortgages to the urban poor, specifically those employed in the informal sector. Through this initiative, MHFC seeks to efficiently and sustainably enable access to housing finance services to the underserved and un-served segments of the population. • Micro Housing Finance Corporation Limited (“MHFC”) was incorporated on

May 16, 2008 with the objective to provide housing finance for lower income households (mostly in the informal sector) in urban India.• One of the issues stalling the development of low income housing is the lack of

finance available to lower income households (especially those without documentation to prove incomes) to buy such homes. MHFC was set up to specifically address this gap.• The company received the necessary regulatory clearance from the National

Housing Bank ("NHB") in the form of the Certificate of Registration ("COR") in Feb 2009 and sanctioned its first loan in June 2009.

Vision

To help financially excluded (especially lower income, informal sector) families own an independent homeAlso to help urban low income and financiallt excluded families to own a house.

The Market• LIG housing shortfall: 25 MM units• LIG housing market size: Rs. 5-10 tr

The Social Need• Even if houses built, 90 % of workforce employed in informal sector• Monthly earnings: Rs. 5,000 to 30,000• Excluded from mainstream housing finance

MHFC seeks to bridge this gap

StrategySimilar to other HFCs (product / processes / spreads) except• (a) customer segment• (b) project based

MHFC scheme• Loan Size: Up to Rs. 10,00,000• Loan to Value Ratio: 80%• Loan Term: up to 15 years• Interest Rate: 12% to 14% (reducing)• Fees: 1% sanction; NIL prepayment• Security: mortgage of the house being financed• Covenants: Bank Account (ECS) / Insurance

MHFC STATUS

• Incorporated June 2008 / NHB license Feb 2009 / Commenced operations inJune 2009• Equity Capital: Rs. 36.5 cr• Total Amount Sanctioned:Rs. 52 cr• Total Amount Disbursed:Rs. 30 cr• Average Loan Size: Rs. 4 lakhs• Average Tenor: 12 years• Number of Approved Projects: 50

MHFC CUSTOMERS• Average MHI: Rs. 8,000 to Rs. 20,000• Primary employed in the informal sector• Breakup of Portfolio by Occupation Type

Salaried 37%Self employed 34%Salaried and self employed 29%

• Average HH Size: 5• Households with multiple earning members• Currently living in rental housing or illegal tenements• Aspiration to own their own homes

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED(HDFC)

INTRODUCTION

• Housing Development Finance Corporation Limited or HDFC is an Indian financial company based in Mumbai. It is a major provider of finance for housing in India.

• It also has a presence in banking, life and general insurance, asset management, venture capital and educational loans.

• It was founded in 1977 as the first specialised mortgage company in India.

HDFC was promoted by the Industrial Credit and Investment Corporation of India.

FEATURES OF PERSONAL HOUSING LOANS

• Fast and Easy Processing

• Simple Documents

• Doorstep Services

• Attractive Interest rates

• Multiple Repayment Options

• Post Disbursement Services

ELIGIBILITY

• Applicant must be atleast 21 years of age

• Less than 60 years of age

• Salaried with regular income

• Earnings must exceed the Minimum Income requirement

• Equated Monthly Installment (EMI) is limited to 50% of monthly income

• Loans capped at 85% of the Property value (LTV of 85 to 100)

• EMIs of other loans reduce the eligibility of the applicant

INCREASE LOAN AMOUNT

• By adding the spouse of the applicant as a co-applicant, His/her income adds to the eligibility for a higher loan amount.

• Choosing a longer loan tenure upto 30 years.

• By making the parent(s) of the applicant as a co-applicant.

BENEFITS OF PERSONAL HOUSING LOAN

• Longer tenure up to 30 years at 10.15 % interest rate

• Exclusive package for women, at 10.10 % interest rate

• Loan is sanctioned before choosing the property

• Large database of projects approved for funding

• Minimal processing fees

• Secure home loan with ingenious insurance plans

HOME EXTENSION LOAN

• HDFC offers home extension loans that makes it convenient for applicants to extend or add space to their homes, “ be it an additional room, larger bathroom or, even an enclosing an open balcony. ”

• Maximum loan amount at 85% of the cost of extension.

• Maximum term of 20 years subject to retirement age of the applicant.

• Home extension loans can be applied for either individually or jointly. Proposed owners of the property, will have to be co-applicants. However the co-applicants of the loan need not be co-owners.

LIFE INSURANCE CORPORATION

• Life Insurance Corporation of India is a prominent name in India’s insurance industry. LIC offers a wide variety of insurance solutions. Let us discuss some of the best plans offered by the company.• Life Insurance Corporation of India (LIC) is an Indian state-owned

insurance group and investment company headquartered in Mumbai. It is the largest insurance company in India with an estimated asset value of ₹1,560,482 crore). As of 2013 it had total life fund of Rs.1433103.14 crore with total value of policies sold of 367.82 lakh that year• The Life Insurance Corporation of India was founded in 1956 when the

Parliament of India passed the Life Insurance of India Act that nationalised the private insurance industry in India. Over 245 insurance companies and provident societies were merged to create the state owned Life Insurance Corporation.

LIFE INSURANCE CORPORATION

OBJECTIVESBuy, Construct, Repair• Residential plot.• House.• Flat.• Repair/Renovation/Extend house.• Clinic.• Office.

Who are eligible for the LIC home loans ?

• Resident Indians. (Salaried, Self-employed, Professionals)• Non - Resident Indians.• Pensioners.

Types of Loans for Resident Indians• Purchase.• Construction.• Extension.• Repairs/Renovation.• Plot Purchase.• Take over from other Institution/Banks + Top up.

Types of Loans for Non -ResidentIndians

• Purchase.• Construction.• Extension.• Repairs/Renovation.

Types of Loans for Pensioners

• Before Retirement.• After Retirement.

Types of LIC Housing Loan plans• Home loans for all:-• Griha Prakash.• New Griha Lakshmi. Non-Resident Indians:-• Griha Shobha. Mortgages:-• Griha Vikas.• Rental securitization.• Professionals:-• Apna office1.• Apna office2.

Home loans for all - New GrihaLaxmi Plan

Loans can be obtained against with securities of:-• 1) Life Insurance policies.• 2) Post office Instruments/Deposits.• 3) Fixed Deposits of the Nationalized banks. Anyone within these can avail this Plan: -• I. Salaried Groups.• II. Self-Employed Persons.• III. Professionals. In this plan you can get loan for: -• I. Purchase.• II. Construction.• III. Renovation/Extension/Repairs.

Home loans for Non residentIndians – Griha Shobha

Who can take this loan ?• 1. Non resident Indians (Persons of Indian Origin).• 2. Working abroad (must be in service).In this plan you can get loan for: -• I. Purchase.• II. Construction.• III.Renovation/Extension/Repairs.

Loans for Mortgages – Griha VikasLoans against Mortgage of: -• 1. Residential House• 2. Flat Anyone within these can avail this Plan: -• I. Salaried Groups.• II. Self-Employed Persons.• III. Professionals.In this plan you can get loan for: -• I. Children’s education.• II. Marriage.• III. Foreign Travel.• IV. Purchase of another property.• V. Business expansion.

HOUSING AND URBAN DEVELOPMENT CORPORATION

INTRODUCTIONThe Housing and Urban Development Corporation Limited (HUDCO) is a government-owned corporation in India. One of the public sector undertakings, it is wholly owned by the Union Government and is under the administrative control of the Ministry of Housing and Urban Poverty Alleviation. It is mandated with building affordable housing and carrying out urban development.

HUDCO was incorporated on April 25, 1970. HUDCO has worked with architects such as B. V. Doshi, Charles Correa,

Christopher Charles Benninger and Sheila Sri Prakash. Housing and Urban Development programme in India with special

emphasis on low cost housing. Development of new townships and their infrastructural needs. Development of buildings material technology and industries. Consultancy services with India and abroad.

HOUSING FINANCE

44.33% of housing loan of HUDCO has been allocated for (EWS) and (LIG) which carries a concessional rate of interest of 8.5%(floating) to 9.75%(floating), over 93% of the dwelling units sanctioned by HUDCO benefit these sections of society.

In the last 44 years, HUDCO has reached people in over 1877 towns and hundreds of villages.

Entrusted with the implementation of the priority programmes of the Ministry like Low Cost Sanitation, Night Shelter for Footpath Dwellers, Shelter Upgradation under Nehru Rozgar Yojana, Rural housing under Minimum Needs Programme.

In times of crisis like Earthquakes, Cyclone, Floods, tsunami etc., HUDCO has extensively contributed in the rehabilitation of the calamity affected households, through its technical and financial help for housing reconstruction.

HUDCO has sanctioned 655 (577 urban & 78 rural) building centres all over the country to introduce alternative and cost effective building technology to people. Premier research and development institutes in the country need these building centres with innovative options, which are cost saving, durable, functional and aesthetic.

Financial assistance is extended to the building materials industry to encourage innovative and alternative methods employing agricultural and industrial waste.

VISION"TO BE AMONG THE WORLD'S LEADING KNOWLEDGE HUBS AND TECHNO-FINANCIAL ORGANIZATIONS FOR CLEAN, GREEN AND SUSTAINABLE HABITAT DEVELOPMENT."

MISSION"TO PROMOTE SUSTAINABLE HABITAT DEVELOPMENT TO ENHANCE THE QUALITY OF LIFE"

OBJECTIVES

Providing long term finance for construction of houses and urban development programs in the country .

Finance or undertake, wholly or partly, the setting up of the new or satellite towns. Subscribe to the debentures and bonds to be issued by the State Housing Urban Development

Boards, Improvement Trusts, Development Authorities etc. specifically for the purpose of financing housing and urban development programs.

Finance or undertake the setting up of industrial enterprises of building material. Administers the money received, from time to time, from the Government of India and other

sources as grant or otherwise for the purposes of financing or undertaking housing and urban development programs in the country, and promote, establish, assist, collaborate and provide consultancy services for the projects of designing and planning of works relating to Housing and Urban Development programs in India and abroad.

Undertakes business of Venture Capital Fund in Housing and Urban Development Sectors facilitating Innovations in these sectors and invest in and/or subscribe to the units/shares etc. of Venture Capital Funds promoted by Government/Government Agencies in the above areas.

Set up HUDCO's own Mutual Fund for the purpose of Housing and Urban Development programs and/or invest in Mutual Funds, promoted by the Government/Government Agencies for the above purpose.

URBAN INFRASTRUCTUREHUDCO gives specialized attention to the critical segments of infrastructure development in cities and towns. Priority is given to water supply, sewerage and drainage schemes especially in small and medium towns. HUDCO has so far sanctioned 1851 Urban infrastructure schemes.

DESIGN AND CONSULTANCY

HUDCO’s is offering technical consultancy in the areas of Architecture, Urban Planning, Urban Design, Landscape Planning including Heritage Planning, Management & Conservation. HUDCO is actively involved with various Ministries in the development of Rich Cultural Heritage and provision of regional infrastructure for overall growth and development. HUDCO has also done considerable work on weaker section housing as well as cost effective housing and has achieved wide acclaim with regard to planning, design and delivery of mass housing.

Some of the prestigious and projects include:• Leh Rehabilitation Project for Victims of Cloud Burst as CSR Initiative. • Gas Victim Housing project at Bhopal (I.I.A’s Award)• New Town development at Pimpri-Chinchwad (I.I.A’s Award) • New Jammu Township (PM’s National Award)• Latur Earthquake Rehabilitation Project (World Habitat Award)• Rehabilitation project for Basket Weavers at Coimbatore (UNCHS’s Best Practices Award) • National Games Village• Earthquake rehabilitation in the Hill Districts of Uttar Pradesh. • HUDCO's Assistance for Earthquake rehabilitation in Jabalpur. • HUDCO's Assistance for Rehabilitation of the Super-cyclone affected in Orissa. • Rehabilitation of Earthquake Affected Regions of Gujarat.

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