Monday, September 15, 2014

Home dreams elude urban poor as credit flow fail to trickle

Loans below Rs 2 lakh have declined from 51 per cent in 2001 to 4.1 per cent in 2014
 

C Shivakumar/ ENS
Chennai:

The dream of owning a home in the city and state has eluded economic
weaker sections as well as low income groups during the last decade as
credit flow from public sector banks failed to reach the lower strata.

Ministry of Housing and Urban Poverty Alleviation have stated that
despite flow of credit to the housing sector in general has increased,
the credit flow to the urban poor remained a challenge.

“Inclusion of ‘housing’ under priority sector lending has not
significantly helped the economic weaker sections as well as low
income group segments,” a MHUPA official stated.

Statistics from MHUPA reveal that loans below Rs 2 lakh have declined
from 51 per cent in 2001 to 4.1 per cent in 2014 for public sector
banks in relation to overall housing loans.

Similarly, the trend of lending for housing up to Rs 5 lakh has
declined from 36 per cent in 2006 to 9.75 per cent in 2010 in relation
to the number of housing units financed, the statistics revealed.

The MHUPA official stated performance of interest subsidy scheme like
Rajiv Rinn Yojana (RRY), improving upon the Interest Subsidy for
Housing the Urban Poor (ISHUP) scheme piloted in 11th plan have been
sub-optimal due to lack of financial inclusion of urban poor, lack of
awareness about the scheme at the branch level of primary lending
institutions and gaps in identification of beneficiaries and linkages
with PLIs.

Interestingly, MHUPA had conducted a meeting with key stakeholders on
credit flow to affordable housing. Meanwhile, the state is also
working on strategies to provide housing to all by 2022. Sources in
Tamil Nadu Housing Board state that TNHB has suggested amendment in
new land acquisition act for acquisition of land exclusively for
Economic weaker sections besides increase in floor space index to
overcome shortage of land availability.

The other suggestions include adoption of innovative technology by
mass construction of housing using factory made pre-cast structures
for speedy execution of projects. The other suggestions include
providing materials such as cement and steel at controlled rates for
economic weaker sections and low income groups.

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