housing finance presentation

8/3/2019 Housing Finance Presentation

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Housing

Finance



Introduction

Housing ± One of the basicneeds of the society.

Housing ± Closely related with

the socio economicdevelopment of the country.

Housing sector in India hasremained underdeveloped in the

past

HF = Fund Based Financial Service



History«..

Responsibility for providing housing finance largelyrested with GOI till early 80¶s.

Housing & Urban Development Corporation

(HUDCO) established in 1970 as a fully owned

GOI enterprise.Objectives of HUDCO ±

To revolutionize the housing conditions of low income

group, weaker section and also look after urban devlop.

Providing long term finance for construction of houses

Finance setting up of new satellite towns

Finance setting up of building material industries

Subscribing deb. / bonds of state Housing boards etc.



National Housing Bank (NHB)

NHB established in 1988 through

NHB Act, 1987

NHB = established by RBI.

NHB = Apex financial institution for

housing finance (HF) in India.

NHB may borrow funds in foreigncurrency from any bank or FI in

India / foreign (prior permission of

GOI & RBI)



Objectives of NHB

To promote / establish HFIsRegulator towards activities of HFCs

To make housing credit affordable

To enhance resources for the Housingindustry

Make loans / advance / financial

assistance to ±HFIs

Scheduled Banks

Central / State authority established by

some Act and engaged in slum clearance



Structure of HF Industry in India

Housing Finance

Informal (Unorganized) Sector (70%) Formal (Organized) Sector (30%)

House Hold Savings

Borrowings from

Friends / relatives /

money lenders

Disposal of Existing

properties

Banking

Government

Non Banking

Commercial & Cooperative

NBFCs

HFCs

N

BHFCs ± LIC / GIC / HDFC,SBIHF, CANFIN Home, CITIHome,

Dewan Housing Finance etc.

NHB

HUDCO

State Govt.



Role of NHB

NHB

Promotional Financial Regulatory

Direct Finance Refinance



Promotional Role of NHB«..

Development & establishment of HFIs

/ HFCs at local & regional levels in

Pvt. and joint sector.

Coordination with Govt & other

agencies to amend existing laws

relating to housing finance

Encouraging NGOs etc in Housing

Development



Financial Role of NHB«..

Direct Finance provided through

Home Loan A/c Scheme (HLAS)

Financial Support to HFCsFinancial Support to industrial units

engaged in manufacturing / supplying

building material

Extends term loans at market rate for

land development projects



Refinance facility available to individuals and

Co¶s upto an extent of Rs. 1 cr. for purchase /

repair / construction / up gradation etc.

Eligibility criteria for HFC¶s to draw 1cr.-Registered with NHB

Should provide long term finance for purchase /

repair / construction / up gradation etc.

75% of capital employed needs to be invested aslong term housing finance

Net Owned funds (NOF) of atleast Rs. 10 cr.

Net NPAs not more than 5% of net advances





Financial Assistance provided at

either of Fixed or Floating rate.

Rate of interest charged depends

upon credit rating assigned to the Co.

Financial assistance is provided for a

period of 2-15 yrs.



Regulatory Role of NHB«..Supervises/ controls the functioning of theentities associated with Housing Finance(HFCs, NBFC, NBHFC¶s Banking financeCo¶s etc.)

Issues guidelines / regulations from time to

timeThe regulatory guidelines issued are inrelation to:

Registration

Capital adequacy

income recognitionLending norms

Interest rates to be charged

Reporting norms

Advertisement guidelines for inviting depositsthrough public.



Procedure of Disbursement of

Loans by HFCs

Eligibility criteria for individuals ±

Loans must be directly given to

individuals / group of individuals

Earning life of applicant (60 yrs) must

cover the repayment period.

Any other criteria stipulated from time to

time Afterwards application accepted with

processing fees + Necessary Docs

Appraisal of the proposal




Credit Appraisal ± SustainedRepayment capacity of applicant is

assessed through

Age

Business Income

Professional Income

Other income

Academic backgroundEmployment stability

Family background

Number of dependents



Legal Appraisal ± Documents likeOriginal Title Deeds

Revenue receipts

Etc are cross verified to assess the mortgage

able security¶s value.

Technical Appraisal ±

Counter checking the furnished

information, records, approvals,clearances, certificates etc. of LIC policies,

Fixed Deposits etc.

A Guarantor is also asked for.




Maximum Amt of Loan Granted

Maximum 85% loan granted of the

cost of (Land + Construction)

Disbursement done either ininstallments / whole amount

EMI payable every month by borrower must not exceed 1/3 of the take home

salary



Thank You