More players, including corporate houses and financial institutes are looking to start affordable housing focussed housing finance companies (HFCs) days after Prime Minister Narendra Modi announced sops for the sector, a top National Housing Bank official said.
“We have already received about six applications for housing finance licences,” Sriram Kalyanaraman, national director & chief executive officer, NHB, told ET. Till date 82 companies have received housing finance approval. NHB is a fully owned subsidiary of Reserve Bank of India (RBI).
Apart from registering, regulating and supervising HFCs, NHB also provides refinancing, project lending to municipalities for affordable housing. NHB currently has many affordable housing projects in Surat, Ahmedabad, Vadodara, and Rajkot.
On December 31 Modi announced interest subsidy of up to 4% on loans borrowed under the Pradhan Mantri Awaas Yojana to boost rural and urban housing. Kalyanaraman said the announcement triggered a lot of interest and there has been a spurt in inquiries to enter the affordable housing financing lending space.
NHB provides 6.5% subsidiary on Rs 6 lakh loan amount to Economic Weaker Section (EWS) and Lower Income Group (LIG) groups. Modi’s latest subsidy could make affordable housing more attractive for many housing finance companies. “We expect further increase in interest in housing finance space; once the rules on PM’s announcement are notified” said Kalyanaraman. The notification is expected in a week. Kalyanaraman expects land prices to come down as well due to demonetisation.
This could allow more builders to enter the affordable housing space. Additionally, with Real Estate Regulatory Authority — the real estate regulator — transparency is set to increase. This could lead to international funding being pumped in the domestic affordable housing space.