NHB to fulfill housing dreams of poor

MARCH 29, 2007: The National Housing Bank (NHB) is all set to come up with low-cost housing townships with modern amenities in urban areas. According to a rough estimate, the market size for the same will be around Rs 25,000 crore in a couple of years.

S Sridhar, chairman and managing director of NHB, said preliminary talks have been held with various stakeholders on the issue. A committee, set up under the NHB, is also trying to chalk out a concrete workable finance model for these low-cost houses. Data suggests that there is a dearth of low-cost housing township while the demand is huge.

Sridhar said that in most developed and developing countries there were specified low-cost housing townships providing all basic amenities.

These townships will be targeted at individuals belonging to the low-income group. Sridhar, however, said documentation of crucial information, including salary inflows, might pose problems. The committee will also find out ways to address this problem.

These townships will be one of the ways to ensure financial inclusion of the urban poor. “We need to solve the housing problem of this section of society,” Sridhar said.

Besides, NHB will also look at direct financing of projects for the poor. A couple of pilot projects has already been initiated and the response has been encouraging for the housing regulator.

Meanwhile, as housing loans with high principal amounts become costlier with the Reserve bank of India increasing the provisioning, public sector banks are also trying to shift their focus on low cost houses, with a average cost of about Rs 4-4.50 lakh.

The growth in housing loans has already registered a slowdown following the hardening of interest rates. Last year, housing loans grew at 35-40% while this fiscal it has come down to about 30%. However, Sridhar said that the basic demand for housing will continue. The slowdown in demand is due to the decline in speculative buying.

Source: The Financial Express