Define Housing Finance in India

In India, for a long time there was no proper financial institution for providing housing finance. During 1960’s, the central and state governments brought various housing programmes in order to relieve the congestion of population in cities and urban areas. In this direction, the Housing and Urban Development Corporation (HUDCO) was established in April 1970, to finance various housing and urban infrastructure activities. Total shares of HUDCO were subscribed by Government of India.

Assistance of HUDCO

It provides mass housing schemes such as:

Rural housing schemes

Co-operative house construction

Urban housing schemes

Cyclone shelters

Land acquisition

Sanitation and slum improvement

Promoting building technology

HUDCO provides the following Housing Refinancing facility to state governments:

State Housing Boards

Rural Housing Boards

Slum clearance Boards

Development Authorities

City Improvement Trusts

Municipal corporations

Town Panchayats

Primary Co-operative Societies.

Housing Development Finance Corporation Ltd. (HDFC)

Later on, private sector Housing finance company came into existence in 1977, which is known as Housing Development Finance Corporation (HDFC) Ltd. It is the first private sector housing finance company in India. It is one of the leaders in the Indian housing finance market. The special features of HDFC are providing finance in the form of:

Home Extension Loan

Home improvement Loan

Short-term building Loan

Home Equity Loan

Land Purchase Loan

HDFC has promoted subsidiaries such as HDFC Bank, HDFC Mutual fund, HDFC Standard Life Insurance Company Ltd., HDFC Secu-rities, Internet Global services Ltd., Credit Information bureau India Ltd.

The List of other leading Housing Finance Companies in India are:

State Bank of India Home Finance (SBI)

LIC Housing Finance Limited

ICICI Home Finance Company Limited

IDBI Home finance Limited (IHFL)

PNB Housing Finance Limited

Dewan Housing Finance Corporation Limited (DHFL)

GIC Housing Finance Limited

Can Fin Homes Limited (CFHL)

The National Housing and the Habitat Policy (NHHP) was formulated in 1998 based on the estimation of housing shortage in the country in 1997. The policy stressed on the following aspects:

Easy access for housing loan, finance and technology by removing the hindrances of legal, financial and administrative controls.

Housing and allied services must be treated as a priority sector like infrastructure sector.

Increase in creation of surpluses in housing stock

The poor and lower middle class people must get quality and cost-effective shelters.

The National Urban Housing and Habitat Policy (NUHHP) was formulated in 2005. The policy focused on urban shelters and emphasized on the promotion of larger flow of funds to meet the revenue requirements of urban housing and infrastructure using innovative tools.

The Working Group on Rural Housing for the 12th five year plan estimated the total housing shortage in rural areas at 48.81 million for the plan period (2012-17). Of these, about 43.93 million units pertain to the below poverty line population.

Housing Finance System in India