Housing Finance Evolution and Reach in India: Y. Saritha Dr.P.V.Narsaiah
Housing Finance Evolution and Reach in India: Y. Saritha Dr.P.V.Narsaiah
Housing Finance Evolution and Reach in India: Y. Saritha Dr.P.V.Narsaiah
Dr.P.V.Narsaiah**
Abstract-
Housing being one of the three basic needs of life always remains in the top priorities of any
person, society and economy. As a human being, an individual needs his own space and privacy,
which can be provided by the ownership of a house. The home is the basic unit of the society.
Home provides a platform to the family and the family is the most important social institution,
which leaves its imprint on an individual for whole life. Thus housing deserves significant
attention in the context of developing policies and strategies for human development. But still the
majority of human populace lives in slums, shanties and temporary shabby shelters in rural areas.
The shortage of housing is a big impediment in the healthy development of an individual and
consequently the society, and the nation. The problem of space, privacy, security and sanitation
leads to social, economic and environmental degeneration. The perpetual strife for space and
house-ownership leads to personal and social disorganization, which is detrimental for the society
and the economy. A developing nation like India has to focus more on housing sector to cater to
the housing needs of burgeoning population and to accelerate the economic growth. The housing
sector has been globally used as an engine to propel the economic growth as it generates
employment and demand in the market. Last one decade has witnessed the authorities giving
significant focus on the housing sector in India.
*
Research Scholar, Sri Venkateswara University, Tirupati,
**
Professor, Dept. Of Commerce, Sri Venkateswara University, Tirupati
OBJECTIVES OF THE STUDY The Government of India had recently made the
development of the housing sector.
To analyse the housing finance in India in
general and Andhra Pradesh in a particular; STRUCTURE OF THE HOUSING FINANCE
To examine the perceptions of customers of SYSTEM IN INDIA:
HDFCL, Nellore division, Nellore district
Identifying the major factors determining the
home loan beneficiaries in Nellore division.
To identify the problems in HDFC housing
finance in Nellore division.
RESEARCH METHODOLOGY
industry. The setting up of National Housing Bank as shifting of rural population to the urban areas, the
a fully owned subsidiary of the RBI, and as an apex need for development of housing sector has been
institution was the culmination of the fulfillment of a emphasized. It is always a dream to own a house
long overdue need of the housing finance industry in however a majority of the population does not have
India. The system has also been characterized by the the required financial assistance to own a house.
emergence of several specialized financial Eyeing this as an opportunity, many firms have opted
institutions, which have considerably strengthened for extending housing loans not only to boost their
the organization of the housing finance system in the bottom lines but also to reduce the prevailing demand
country. In 1990's the pace set in the earlier decades and supply gap. The genuine demand arising out of
was carried forward. Many HFCs were set up under the individual need for housing, together with the
the directions of the NHB. The process of present boom in the housing sector it is all set to
liberalization covered the retail housing finance provide a platform for the housing finance companies
sector substantially. The most significant 48 change to carve out a piece of fortune.
was the enhancement of the amount set aside by the What remained as a very low-profile sector
commercial banks for their lending to the housing in India is suddenly witnessing activity that is
sector from 1.5 per cent to 3 per cent (Union budget promising a bright future. Out of India‟s new housing
1999-2000). Chart is given to reflect on the units, 20 percent are financed through the housing
classification of housing finance in India. financing institutions. With the gap between the
required number of houses and the actual,
government identified housing sector as a core and it
is only with the timely in intervention of the
government that housing finance has become a major
industry in India. With the establishment of National
Housing Bank, the government has provided the
much-needed boost to this sector. At present out of
380 odd HFIs in India, 42 housing finance companies
are registered with the National Housing Bank out of
them 20 are valid for acceptance of public deposits
and remains are not. This number is going to increase
in the near future with the industrial growth.
Throughout the second part of the last decade, this
sector has witnessed a growth of over 30 percent and
promises to grow the same rate in the next couple of
years. Recognizing the growing need of housing
Traditionally in India, most people depend finance in India, the government has emphasized on
on their provident fund and gratuity amounts received housing and housing finance in the ninth five year
after retirement for buying a home. However, with plan to know that there is a short fall of more than 20
the emergence of housing finance as a major business mission house units. This is the first time that India
in the country, an increasingly large number of people has emphasized on the housing sector.
are going in for home loans. Socially too, India has Even the Asian development Bank has
changed, and there is no stigma attached today for embarked on a two-fold strategy for India‟s housing
borrowing funds. Five-year plans have been sector. One is focusing on providing funds to
emphasizing on the need for promoting housing financial intermediaries who in turn, lend to
finance schemes particularly for the poor and weaker individual borrowers at the household level. The
sections of the society. second objective is combining slum upgrading and
HOUSING FINANCE IN INDIA: micro credit schemes for lower income groups in its
In the first 25 years of post-independence, state level specific integrated urban development
India has concentrated on agricultural development projects. These latest development in the housing
only after the industrial revolution and the continuous sector has made housing finance one of the growth
drivers for the Indian economy in the last decade companies, other financial institutions and budgetary
what earlier remained as an isolated segment has now allocations. From the available data it has observed
transformed itself into a core sector. Housing finance that the banks, housing finance companies, and
in India is getting recognition as a specialized finance cooperative sector institutions had disbursed an
product, thanks to the efforts of housing finance amount of Rs. 1.73 lacs crores during the period
companies and the subsidiary outfits of banks, 2002-05. Overall contribution of these three
specializing in this area. institutions i.e. banks, HFCs and cooperative sector
institutions, would be around Rs. 3.60 lacs crores
LOAN DISBURSEMENT BY NHB during the 10th plan period 2002-07 as shown in Table
Cumulative 2.
Year Disbursement Disbursement Co-op.
Commerc-
2006 – 07 5,500 31,425 Year
ial Banks
HFCs Instituti RRB’S Total
ons
2007 – 08 8,587 40,012
2006-07 4,250 1,085 10 0 5345
2008 – 09 10,854 50,866
2009 – 10 8,108 58,974 2007-08 7,328 1,189 0
0
8517
2010 – 11 11,723 70,697
2008-09 3,447 7,055 0 202 10704
2011 – 12 14,390 85,087
185
2012 – 13 17,542 102,629 2009-10 4,150 3,543.8 40 7918
The gender wise breakup of beneficiaries Interest rate on the loan taken by the
given in Table3 reveals that 66.27 per cent are males beneficiaries from HDFC. Interest rate are awareness
and 33.72 per cent are females. of users. The floating rates may change from change
from time to time.
Main Occupation
Main Occupation Number Percentage %
The occupation of the beneficiaries also
influences the habit of taking loan from HDFC.
Mainly permanently occupied people may go for
Govt. Employee 32 37.20
loans to own a house.
Table 4: Main Occupation
Private Employee 18 20.93
Table 4 manifests that 47.20 per cent of the
beneficiaries of HDFC are government employee.
23.25 per cent are in business/profession and 20.93
Business 20 23.25
per cent are in private employment. Meanwhile only
18.60 per cent of the samples are agriculturists. Agriculture 16 18.60
Awareness
Interest Rates Number Percentage
The education of the beneficiaries is a crucial
of HDFC
factor in choosing the source of loans. Uneducated
persons often choose non-institutional source and Aware 48 41.28
land themselves in trouble later on. On the other
hand, educated persons compare the different sources Partially aware 24 27.90
and select the most reasonable one.
Educational Number Percentage Unaware 14 16.27
Qualification
TOTAL 86 100
Graduates 19 22.09
Table 5: Awareness of Rate of Interest
Floating rate interest 29 33.72 beneficiaries. Lack of income and other family
problems compel the beneficiaries to make default
TOTAL 86 100 with the repayment.
There are different reasons for taking housing Table 8: Difficulties for repayment of Loan
loans from HDFC by the beneficiaries. The main
reason for availing loan from HDFC is the easy Table 9 reveals the difficulties for repaying
accessibility. the loan taken by beneficiaries. The main difficulty
faced by them is the 32.55 per cent insufficient
Reason Number Percentage income to remit the monthly installment. Next to it is
the tight repayment schedule 26.74 percent, 24.41 per
Law rate of interest 24 27.90
cent frequently charges in EMI and 16.27 percent
HDFC will charge high p
No loan limit 15 17.44
REFERENCES:
Table 8 shows categorization of beneficiaries on
[1]Tenth five year plan documents 2002-2007
the basis of reason for availing loan from HDFC.
Majority of them have taken loan from HDFC [2] Bedi, H.L., Haridikar, „V.K., Housing and Urban
because of its 27.90 percent of low rate of interest, Development Corporation‟, Practical Banking Advances,
9th Edition, 1997.
followed by 20.93 per cent Difficulty in getting loan
from other, 19.76 percent Low EMI, 17.44 percent [3] “Report of the Task Force on Cooperative Housing,
No loan limit and 13.95 percent Simple loan Third Draft”, 2005.
procedure for the borrowers from HDFC.
[4] Charles Abrams, „Housing in the Modern World-Man‟s
Difficulties for Repayment of the Struggle for Shelter in an Urbanizing World‟, Faber,
London, 1969, p. 106
Loan [5]‟The Function and working of the reserve Bank of
There are various types of difficulties for the India‟, July,1970.
timely repayment of the loan availed by the [6] Ibid.