Urban housing fund to function in a month
The urban housing fund which was announced recently by the Finance Minister in the Budget is likely to function within a month. The minister proposed an allocation of Rs. 2,000 crore to the National Housing Bank (NHB) for initiating it.
According to an official, the fund will be used for the refinancing of the banks and the housing finance companies pertaining the loan which had been given to the borrowers from the middle and lower income segment.
The official further stated that this is very important for the affordable housing projects as loans with a sum of Rs. 10 lakh is proposed to be refinanced under this scheme. Perhaps, the final details will be finalized after consulting the RBI.
The NHB expects that this scheme will incentivise the builders who initiate affordable housing projects for the lower income group. The official also stated that the affordable housing segment is already progressing and the fund will improve the sector’s prospects.
As per a report by the KPMG in 2012, affordable housing development is still a challenge for the developers and that the government should formulate the policies which can encourage increased participation from the private sector in the form of project financing, technological solutions and project delivery.
However, this scheme will create a larger impact in the Tier-II and Tier-III cities which have lower property prices. Further, the NHB expects that the fund will help the borrowers from the government-run schemes like slum rehabilitation in metro cities. Urban Housing fund will also cater to the impetus for the affordable housing and will make the liquidity available for the banks who can lend to this segment with the lower-income group needing the capital to purchase property in lower income group.
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Affordable housing projects, Housing finance companies, middle and lower income segment, Minister in the Budget, National Housing Bank (NHB), slum rehabilitation in metro cities, Urban Housing Fund
