Refinance Scheme for HFC

NHB currently has the following refinance schemes in operation for HFCs:

Liberalized Refinance Scheme (LRS)

Scheme Code - RH1

Purpose - To provide refinance assistance in respect of housing loans extended by HFCs for:

Construction / purchase of dwelling units

Repairs / renovation / upgradation of dwelling units

Eligible Loans

Loan size - Any – (Interest rates concession is provided upto lakhs)

Location - Rural or urban

Tenure - 1 year to 15 years

Ultimate borrowers – Any

Golden Jubilee Rural Housing Refinance Scheme (GJRHRS)

Scheme Code - RH2

Purpose - To provide refinance assistance in respect of housing loans extended by HFCs for:

Construction / purchase of dwelling units in rural areas

Repairs / renovation / upgradation of dwelling units in rural areas

Eligible Loans

Loan size - upto 15 lakhs

Location – Rural

‘Rural area’ is defined as the area comprised in any village, including the area comprised in any town, the population of which did not exceed 50,000 as per the 1991 Census.

Tenure - 1 year to 15 years

Ultimate borrowers – Any

Rural Housing Fund (RHF)

Scheme Code - RH3

Purpose - To provide refinance assistance in respect of housing loans extended by HFCs to borrowers belonging to ‘weaker sections’ for:

Construction / purchase of dwelling units in rural areas

Repairs / renovation / upgradation of dwelling units in rural areas

Eligible Loans

Loan size - upto 15 lakhs

Location – Rural

‘Rural area’ is defined as the area comprised in any village, including the area comprised in any town, the population of which did not exceed 50,000 as per the 1991 Census.

Tenure - 3 years to 7 years

Ultimate borrowers - Persons belonging to weaker sections

“Weaker section” means and includes:

Small and marginal farmers with land holding of 5 acres and less, and landless labourers, tenant farmers and share croppers;

Women

All individuals eligible for loans under Swarnjayanti Gram Swarozgar Yojana (SGSY) and Differential Rate of Interest (DRI) i.e. classified as BPL or marginally above the poverty line.

Scheduled Castes, Scheduled Tribes and

Persons from minority communities as may be notified by Government of India from time to time. In States, where one of the minority communities notified is, in fact, in majority, item will cover only other notified minorities. These States/ Union Territories are Jammu & Kashmir, Punjab, Sikkim, Mizoram, Nagaland and Lakshadweep.

rural population with income upto 2 lakhs

Type of Interest Rate - Refinance under RHF will be extended at interest rates which shall remain fixed for the entire tenure without reset.

Energy Efficient Housing Refinance Scheme (EEHRS)

Scheme Code - RH4

Purpose - To provide refinance assistance in respect of housing loans extended by HFCs for construction / purchase of new energy efficient housing units in urban areas

Validity of Scheme - This Scheme shall remain valid till 31-12-2013 or such further time as decided by NHB.

Eligible Loans

Type of housing unit - Having energy efficiency (EE) certificate recognized by National Housing Bank in consultation with KfW, based on TERI calculations

Loan size – any

Location – Urban

Date of origination of loan - Loans sanctioned and disbursed on or after 01-01-2011

Tenure - 1 year to 15 years

Ultimate borrowers – Any

Special Refinance for Urban Low Income Housing

Scheme Code - RH5

Purpose - To provide refinance assistance in respect of housing loans extended by HFCs in urban areas for construction / purchase of new dwelling units, purchase of existing dwelling units and extension / up gradation / repairs of existing dwelling units

Eligible Loans

Loan size - upto 10 lakhs

Location – Urban

Date of origination of loan - Loans sanctioned and disbursed on or after 01-01-2012

Tenure - The tenure of refinance for a particular disbursement shall be co-terminus with the average residual tenure of the pool of housing loans included in that claim for disbursement, subject to minimum tenure of 5 years and maximum tenure of 15 years

Ultimate borrowers - Persons having annual household income not exceeding 2 lakhs

Note: Household income for the purpose of this Scheme shall mean the income of all the co-borrowers taken together. Income shall be assesses / verified by the HFCs to their satisfaction and recorded as such in their credit notes / loan files covering parameters like IIR, LTV, etc. assessing credit worthiness and affordability of the borrowers.

Security for loan - The housing loan shall be secured by mortgagable title over the land / property. Loans given to urban slum dwellers having mortgagable land title in the form of ‘patta’ allotted by state governments would be eligible for refinance under the Scheme. There Page 22 of 52 shall not be any requirement for seeking collateral security or guarantee from any third party as additional security.

Type of Interest Rate - Refinance under the Scheme will be extended at rates of interest which shall remain fixed for the entire tenure.

Conversion from Fixed Rate to Floating Rate - Conversion from fixed rate of interest to floating rate of interest shall be permitted without payment of any conversion fee after three years from the date of disbursement.

On-Lending Cap

With a view to ensuring delivery of credit at affordable rates to the target segments, an interest rate cap on on-lending is envisaged under the Scheme.

The interest rates on individual loans covered under refinance under the Scheme should not be more than 275 basis points over and above the interest rate payable by the HFC to NHB on that tranche of refinance.

Loans carrying guarantee cover under the Credit Risk Guarantee Fund Trust for Low Income Housing will have on-lending cap of 250 bps over and above the refinance interest rate on that tranche.

Refinance Scheme for Installation of Solar Water Heating and Solar Lighting Equipments in Homes

Scheme Code - RH6

Purpose - To provide refinance assistance in respect of loans extended by HFCs for purchase and installation of solar water heating systems and purchase and installation of solar lighting systems

Note: The loan for solar equipments could be extended by the HFCs either as a stand-alone loan for solar equipment only, or as part of composite housing loan. Loans extended by the HFCs in the form of project loans for installation of solar equipment in existing or new buildings would also be eligible for refinance under the Scheme.

Eligible Loans

Loan size - upto 50,000

Location - Rural / Urban

Date of origination of loan - Loans disbursed on or after 01-07-2012

Tenure - 3 years to 7 years

Type of Interest Rate - Refinance under the Scheme will be extended at rates of interest which shall remain fixed for the entire tenure.

Conclusion

Real estate finance has received a boost through combination of growing demand and rising affordability. While the demand for housing has always been there and will be for a long run to come, its increased affordability has been the key to growth. Enhanced affordability has spurred an increase in the demand for real estate loans. The key to high growth rates in the housing finance business will continue to be affordability.