Report on Trend and Progress of Housing in India 2014

83 Report on Trend and Progress of Housing in India 2014

84 List of Chapters Page No. Contents No. 1 Current Macro and Micro Economic Condition and Status of Indian Economy 1.1 Global Economy Outlook 91 1.2 Indian Economy 94 1.3 Indian Economy: Prospects for FY 2014-15 96 1.4 NHB RESIDEX: The Residential Property Price Index 97 2 Overview of the Indian Housing Sector 2.1 Importance of Housing 100 2.2 Issues Concerning Housing in India 102 2.3 The Indian Housing Finance Market 103 3 Policy Environment for Housing and Housing Finance 3.1 Concept of Affordable Housing 107 3.2 The Role of Different Agencies towards Affordable Housing 107 3.3 Recent Housing Schemes Implemented by the Government of India 109 3.4 Select State Level Initiatives in Housing 113 4 Role of National Housing Bank 4.1 Role of National Housing Bank 120 4.2 Performance of National Housing Bank (July 01-June 30) 122 4.3 Resource Mobilization 123 4.4 Refinance Operations 125 4.5 Sanctions and Disbursements through Direct Finance 132 4.6 Regulation and Supervision 133 4.7 Promotion and Development 134 4.8 Capacity Building 138 5 Operations and Performance of Housing Finance Institutions 5.1 Number of Housing Finance Companies 141 5.2 Financial Profile of HFCs 142 5.3 Key Performance Indicators of HFCs 143 5.4 Borrowing Profile of HFCs 145 5.5 Public Deposits with HFCs 145 5.6 Asset Profile of HFCs 147 5.7 Disbursements of Housing Loans by HFCs, based on type of Borrowings 148 6 Institutional Performance viz-a-viz Housing Finance 6.1 Categories of Institutions Providing Housing Finance 156 6.2 Scheduled Commercial Banks and their Performance in Housing Finance 156 6.3 The National Co-operative Housing Federation of India 159 6.4 Microfinance Institutions 161 7 Area of Focus: Sustainable Energy Efficient Housing 7.1 Introduction 162 7.2 Energy Consumption in Residential Buildings 163 7.3 Towards achieving energy efficiency 164 7.4 Steps taken by National Housing Bank 166 7.5 Benefits to Various Stakeholders Under the Programme 167 7.6 Building Energy Efficiency 167 8 Way Forward 170

85 Report on Trend and Progress of Housing in India 2014 List of Tables No. Contents Page No. 1 Overview of the World Economic Outlook Projections 92 2 Quarterly Estimate of GDP at Factor Cost in Q1 (April-June) of 2014-15 (at 2004- 95 05 prices) 3 City-wise Housing Price Index for the quarterApril-June, 2014 99 4 Estimated Housing Shortage in India : 2012-2017 100 5 Financial Highlights for the last SixYears 122 6 Income expenditure and profitability trend in the last four years 122 7 Total Outstanding Borrowing as on June 30, 2014 123 8 Refinance Sanctions and Disbursements for the years 2012-13 125 9 PLI -wise break-up of Cumulative Disbursements as on June 30, 2014 126 10 Trend in NHB's Refinance Disbursements between 1999 and 2014 127 11 The tenure-wise breakup of disbursements during 2012-13 and 2013-14 128 12 Disbursements made during 2013-14 and outstanding as on 30.06.2014 based on 128 type of interest rate 13 Break-up of refinance disbursements in 2013-14, on the based of size of underlying 128 individual housing loans 14 Area-wise trend in Refinance disbursed against the Individual Housing Loans 129 between 2009 and 2014. 15 Scheme-wise trend in Disbursements under NHB's Refinance between 2011 and 2014 129 16 Trend in Refinance Disbursements made to different categories of Primary 129 Lending Institutions between 2009 and 2014 17 Trend in disbursements made by NHB under Energy Efficient Housing Refinance 131 Scheme 18 Trend in allocation and utilization of RHF 131 19 Allocation and utilization of UHF 132 20 Trend in Project Finance Disbursements made by NHB between 2002 and 2014 133 21 NPV subsidy disbussed by NHB between 2009 and 2014, under ISHUP 135 22 Disbursement of subsidy to PLIs, under 1% Interest Subvention Scheme between 135 2010 and 2013 23 State-wise and income group-wise bifurcation of EWS and LIG loan accounts 136 against which the Trust has made the Guarantee cover to MLIs 24 Trend in performance of GJRHFS, since inception 137 25 Trainings conducted by NHB in 2013-14 139 26 Trend in Key Financial Indicators of HFCs for the last three years 142 27 Trend in Performance of Public and Private Ltd. HFCs for the last three years 143 28 Trend in Performance of Public Deposit accepting HFCs with Non-accepting 144 HFCs for the last three years 29 Trend in Performance of Sponsored HFCs with other HFCs for the last three years 144 30 Trend in Composition of Borrowings of HFCs for the last three years 145 31 Trend in Outstanding Loans & Advances, and Investments of HFCs for the last 147 three years 32 Comparison of Housing Loans with Total Loans of HFCs 148 33 Trend in Disbursements of Housing Loans of HFCs to individuals for the last three 150 years Acquisition/Construction of New Houses

86 34 Trend in Disbursements of Housing Loans by HFCs to Individuals for the last three 150 years Upgradation (including major repairs) 35 Trend in Disbursements of Housing Loans by HFCs to Individuals for the last three 150 years Acquisition of Old/Existing Houses (Resale) 36 Trend in Total Disbursements of Housing Loans by HFCs to Individuals for the last 151 three years 37 Disbursements of Housing Loans by HFCs to Individuals in 2013-14, as per 151 Income Category 38 Trend in HFCs Housing Loan distursements in different States/UTs, as per Urban 152 and Rural Categories 39 Trend in Outstanding Housing Loans of SCBs for the last two years 157 40 Area-wise Outstanding Housing Loans of SCBs, as on March 31, 2013 157 41 Classification of outstanding Housing Loans of SCBs, as per Rate of Interest 158 42 Comparison of PSBs Housing Loans for the last two years 158 43 Trend in Slab-wise Housing Loans of PSBs for the last two years 159 44 Trend in Borrowings, Sanctions and Disbursements of Apex Cooperative Housing 160 Federations (Cumulative) for the last three years 45 Trend in Housing Loans Disbursed and Units Constructed byACHFs : (State-wise) 160 for the last three years

List of Graphs

No. Contents Page No. 1 Asia-Changes in Real GDP at Market Prices 91 2 Inflation rate in India as per Consumers Price Index (CPI) 94 3 Projection of Growth of Urban Population in India 101 4 Share of outstanding borrowing of NHB as on June 30, 2014 123 5 Refinance Sanctions for the years 2012-13 and 2013-14 125 6 Refinance Disbursements for the years 2012-13 and 2013-14 126 7 PLI -wise break-up of cumulative disbursements as on June 30, 2014 126 8 Trend in NHB's refinance disbursements, between 1999 and 2014 127 9 Trend in refinance disbursements made to different categories of primary lending 130 institutions between 2009 and 2014 10 Trend in performance of GJRHFS, since inception 137 11 Classification of Registered Housing Finance Companies 141 12 State/ Union Territory-wise Branches/Offices of Registered HFCs 141 13 Trend in Outstanding Resources of HFCs for the last three years 142 14 Trend in OutstandingAssets of HFCs for the last three years 143 15 Trend in Size-wise Public Deposits of HFCs for the last three years 146 16 Trend in Interest rate-wise Public Deposits of HFCs for the last three years 146 17 Trend in Maturity-wise Public Deposits of HFCs for the last three years 147 18 Trend in Maturity-pattern of Outstanding Housing Loans to Individuals by HFCs 148 19 Trend in Disbursements of Housing Loans by HFCs for the last three years, based 149 on Category of the Borrowers. 20 Trend in Disbursements of Housing Loans to Individuals by HFCs for the last 149 three years, based on purpose of utilization.

87 Report on Trend and Progress of Housing in India 2014

21 Trend in Outstanding Housing Loans of PSBs 159 22 Trend in Consumption of Electricity in India 162 23 Sector-wise Consumption of Electricity (Utilities) during 2012-13 163 24 Future trend of building sector in India 163

List of Box Items

No. Contents Page No. 1 Excerpts from the Economic Survey 2014-15 97 2 Study on Impact of Investments in the Housing Sector on GDP and Employment 102 in the Indian Economy 3 Report on "Scaling Up Housing Microfinance" by NHB in collaboration with 106 IFMR Capital and DFID, UK. 4 Announcements related to Housing Sector in the Union Budget 2014-15 109 5 Grievance Registration and Information Database System (GRIDS) 134 6 Design Guidelines for Energy-efficient Multi-storey Residential Buildings by 168 BEE -Recommendations on energy-efficiency features for consideration at the design stage of multi-storey residential buildings

List of Pictures

No. Contents Page No. 1 NHB's Financial Performance at a Glance 122 2A Trend in HFCs Disbursements of Housing Loans to Individuals 153 3A Trend in HFCs Outstanding Housing Loans to Individuals 153 2B Trend in HFCs Disbursements of Housing Loans to Builders 154 3B Trend in HFCs Outstanding Housing Loans to Builders 154 4 Trend in HFCs Disbursements of Housing Loans Acquisition/ Construction of 155 New Houses to Individuals

88 eks- eqLrQk v/;{k ,oa izcU/k funs'kd Mohammad Mustafa Chairman & Managing Director

NHB (ND)/ CMD /3985 /2015 April 22, 2015

The Finance Secretary Government of India Ministry of Finance North Block New Delhi- 110001

Letter of Transmittal

Dear Sir,

In pursuance of provision of Section 42 of National Housing Bank Act, 1987, I have pleasure in transmitting herewith a copy of the 'Report on Trend & Progress of Housing in India' 2014.

Yours faithfully,

(Mohammad Mustafa) Encl: As above

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89 Report on Trend and Progress of Housing in India 2014 eks- eqLrQk v/;{k ,oa izcU/k funs'kd Mohammad Mustafa Chairman & Managing Director

NHB (ND)/ CMD /3986 /2015 April 22, 2015

The Governor Reserve Bank of India Central Office Building Shahid Bhagat Singh Marg Mumbai - 400 001

Letter of Transmittal

Dear Sir,

In pursuance of provision of Section 42 of National Housing Bank Act, 1987, I have pleasure in transmitting herewith a copy of the 'Report on Trend & Progress of Housing in India' 2014.

Yours faithfully,

(Mohammad Mustafa) Encl: As above

90 Chapter 1 Current Macro and Micro Economic Condition and Status of Indian Economy

1.1 Global Economy Outlook

1.1.1 Global activity has broadly strengthened and is expected to improve further in 2014-15, with much of the impetus coming from advanced economies. Inflation in these economies, however, has undershot projections, reflecting still large output gaps and recent commodity price declines.

1.1.2 As mentioned in the IMF's report on World Economic Outlook-April 2014, global growth picked up in the second half of 2013, averaging 3 percent, up from 2 percent recorded during the previous six months.Advanced economies accounted for much of the pick-up, whereas growth in emerging markets increased only modestly1 . The strengthening in activity was mirrored in global trade and industrial production. The latest data suggest a slight moderation in global growth in the first half of 2014. The stronger-than-expected acceleration in global activity in the latter part of 2013 was partly driven by increase in inventory accumulation that will be reversed.

1.1.3 Emerging market and developing economies (EMDEs), witnessed inflationary pressures driven by a weaker exchange rate and domestic supply side factors. Many central banks in EMDEs were faced with the trade-off arising from a combination of slowing economic growth and stubborn inflationary pressures. In view of high inflation and exchange rate depreciation, many central banks in the EMDEs including Turkey, Ukraine, Russia, Indonesia and Brazil hiked policy rates. In the case of advanced economies, the US Fed began tapering in a calibrated manner in view of a strengthening economic recovery. The European Central Bank (ECB) introduced negative deposit rate to encourage bank lending for business activity. Global commodity prices continued to soften amid improved supply and weak demand conditions in 2013-14. Global crude oil prices witnessed some uptick during H1 of 2013-14 driven by supply outages but declined in H2 of 2013-14 on account of easing supply concerns and tepid demand conditions2 .

1.1.4 In emerging market and developing economies, growth picked up slightly in the second half of 2013 due to increase in exports, lifted by stronger activity in advanced economies. But the Graph 1 : Asia-Changes in Real GDP at Market Prices (in percent)

1. ASEAN includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam 2. India's GDP is at factor cost

1World Economic Outlook April 2014 2Reserve Bank of India Annual Report 2013-14

91 000 Report on Trend and Progress of Housing in India 2014

investment weakness continued, and external funding and domestic financial conditions increasingly tightened. Supply-side and other structural constraints on investment and potential output (for example, infrastructure bottlenecks) are issues in some economies. These offsetting forces are expected to remain in effect through much of 2014. Overall, however, emerging market and developing economies continue to contribute more than two-thirds of global growth, and their growth is projected to increase from 4.7 percent in 2013 to 4.9 percent in 2014 and 5.3 percent in 2015.

1.1.5 While the financial environment for emerging markets has been challenging, financial conditions across Asia have remained broadly conducive. Domestic credit growth and corporate bond issuances have been strong indeed, corporate leverage for the region as a whole has risen, as companies tried to take advantage of the still favorable global liquidity conditions.Activity across Asia picked up in the second half of 2013. GDP growth improved across most of the region during the past year, and recent high-frequency indicators, while somewhat mixed, point to a solid expansion continuing into 20143 .

Table 1 - Overview of the World Economic Outlook Projections (Percent change unless noted otherwise) Year over Year Difference from Q4 over Q4 October 2013 WEO Estimates Projections Published Estimates Projections 2012 2013 2014 2015 2014 2015 2013 2014 2015 World Output 1 3.1 3.0 3.7 3.9 0.1 0.0 3.3 3.6 3.8 Advanced Economies 1.4 1.3 2.2 2.3 0.2 –0.2 2.0 2.1 2.3 United States 2.8 1.9 2.8 3.0 0.2 –0.4 2.5 2.8 3.0 Euro Area –0.7 –0.4 1.0 1.4 0.1 0.1 0.5 1.2 1.5 Germany 0.9 0.5 1.6 1.4 0.2 0.1 1.6 1.3 1.4 France 0.0 0.2 0.9 1.5 0.0 0.0 0.6 1.2 1.6 Italy –2.5 –1.8 0.6 1.1 – 0.1 0.1 –0.8 1.0 1.2 Spain –1.6 –1.2 0.6 0.8 0.4 0.3 –0.2 0.7 0.9 Japan 1.4 1.7 1.7 1.0 0.4 –0.2 3.1 0.9 0.6 United Kingdom 0.3 1.7 2.4 2.2 0.6 0.2 2.3 2.7 1.8 Canada 1.7 1.7 2.2 2.4 0.1 –0.1 2.2 2.3 2.4 Other Advanced Economies 1.9 2.2 3.0 3.2 – 0.1 –0.1 2.7 2.9 3.4 Emerging Market and 4.9 4.7 5.1 5.4 0.0 0.1 4.8 5.4 5.6 Developing Economies 1 Central and Eastern Europe 1.4 2.5 2.8 3.1 0.1 –0.2 2.9 3.7 2.8 Commonwealth of 3.4 2.1 2.6 3.1 – 0.8 –0.7 2.2 1.4 3.1 Independent States Russia 3.4 1.5 2.0 2.5 – 1.0 –1.0 1.9 1.5 3.2 Excluding Russia 3.3 3.5 4.0 4.3 – 0.1 –0.1 ...... Developing Asia 6.4 6.5 6.7 6.8 0.2 0.2 6.4 6.8 7.0 China 7.7 7.7 7.5 7.3 0.3 0.2 7.8 7.6 7.3 India 2 3.2 4.4 5.4 6.4 0.2 0.1 4.6 5.5 7.0 ASEAN-5 3 6.2 5.0 5.1 5.6 –0.3 0.0 4.0 5.6 5.6

3IMF Regional Outlook (Asia), April 2014

92 Chapter-1 Current Macro and Micro Economic Condition and Status of Indian Economy

Latin America and the 3.0 2.6 3.0 3.3 –0.1 –0.2 1.6 3.4 2.8 Caribbean Brazil 1.0 2.3 2.3 2.8 –0.2 –0.4 1.9 2.6 3.0

Mexico 3.7 1.2 3.0 3.5 0.0 0.0 0.4 4.2 3.3 Middle East, North Africa, 4.1 2.4 3.3 4.8 –0.3 0.7 ...... Afghanistan, and Pakistan Sub -Saharan Africa 4.8 5.1 6.1 5.8 0.1 0.1 ...... South Africa 2.5 1.8 2.8 3.3 –0.1 0.0 1.9 3.2 3.3 Memorandum World Growth Based on 2.5 2.4 3.1 3.4 0.1 –0.1 2.8 3.0 3.2 Market Exchange Rates World Trade Volume (goods 2.7 2.7 4.5 5.2 –0.5 –0.3 ...... and services) Imports (goods and services) Advanced Economies 1.0 1.4 3.4 4.1 –0.7 –0.5 ...... Emerging Market and 5.7 5.3 5.9 6.5 0.0 –0.2 ...... Developing Economies Commodity Prices (U.S. dollars) Oil 4 1.0 –0.9 –0.3 –5.2 2.8 0.8 2.7 –2.7 –5.3 Nonfuel (average based on –10.0 –1.5 –6.1 –2.4 –2.0 –0.3 –3.8 –4.6 –1.8 world commodity export weights) Consumer Prices Advanced Economies 2.0 1.4 1.7 1.8 –0.1 0.0 1.3 1.9 1.7 Emerging Market and 6.0 6.1 5.6 5.3 0.0 0.1 5.7 5.1 4.8 Developing Economies 1 London Interbank Offered Rate (percent) On U.S. Dollar Deposits 0.7 0.4 0.4 0.6 –0.2 –0.3 ...... (6 month) On Euro Deposits (3 month) 0.6 0.2 0.3 0.5 –0.2 –0.4 ...... On Japanese Yen Deposits 0.3 0.3 0.2 0.2 0.0 –0.2 ...... (6 month)

Note: Real effective exchange rates are assumed to remain constant at the levels prevailing during November 11-December 9, 2013. When economies are not listed alphabetically, they are ordered on the basis of economic size. The aggregated quarterly data are seasonally adjusted.

1. The quarterly data and projections account for 90 percent of the world ppp weights and around 80 percent of the emerging market and developing economies. 2. For India, data and forecasts are presented on a fiscal year basis and output growth is based on GDP at market prices. Corresponding growth forecasts for GDP at factor cost are 4.6, 5.4, and 6.4 percent for 2013, 2014, and 2015, respectively. 3. Indonesia, Malaysia, Philippines, Thailand, and Vietnam. 4. Simple average of prices of U.K. Brent, Dubai Fateh, and West Texas Intermediate crude oil. The average price of oil in U.S. dollars a barrel was $104.11 in 2013; the assumed price based on futures markets is $103.84 in 2014 and $98.47 in 2015.

93 Report on Trend and Progress of Housing in India 2014

1.2 Indian Economy

1.2.1 The Indian economy weathered the global financial crisis rather well and quickly recovered from the decline in growth rate in 2008-09 to a healthy growth that averaged around 9 per cent annually in 2009-10 and 2010-11. However, Indian economy went through challenging times being part of the global economy with its exports and imports amounting to 43 percent of GDP and two-way external sector transactions amounting to 108 percent of GDP. The GDP went down to 4.5% in 2012-13 and 4.7% in 2013-14 and could be attributed to domestic and external factors such as cyclical down turn with global contractionary headwinds, elevated current account deficit, macroeconomic imbalance, persistent inflation, and the need for a sustainable policy. The economy in 2013-14 has faced rather turbulent times emanating from exchange rate pressures amid capital outflows, persistence of near double digit inflation, fiscal imbalances and a decline in investment.

1.2.2 In 2013-14, the agriculture sector's rebound to an above trend growth rate on the back of a normal monsoon, supported overall growth. The industrial sector contracted, while services sector growth remained unchanged at the previous year's level. Structural impediments, high inflation and domestic policy uncertainties continued to weigh down growth prospects. A series of financial turbulence across the globe coupled with rising crude prices caused capital outflows and exerted pressure on the exchange rates, with the Indian economy more or less typifying the 'fragile' EME basket for the first half of FY 2013-14. It was observed that a low overall growth reflected contracting fixed investment and slowing consumption, though there was an improvement in export growth aided by rupee depreciation and contraction in imports due to subdued demand conditions and policies to dissuade gold imports.

1.2.3 The inflation rate in India was recorded at 7.96 percent in July of 2014. Inflation Rate in India averaged 9.49 percent from 2012 until 2014, reaching an all-time high of 11.16 percent in November of 2013 and a record low of 7.31 percent in June of 2014. The moderation in consumer price inflation resulted from a sharp correction in food prices. However, the disinflationary momentum has not gathered strength as decline in food prices was temporary and second round effects from high food inflation continue to exert pressures on the general price level. CPI excluding food and fuel inflation showed considerable persistence at an elevated level during H1 of 2013 - 14, followed by a fall from 8.5 per cent in September 2013 to 7.8 per cent in March 2014

Graph 2 : Inflation rate in India as per Consumer Price Index (CPI) (in percent)

12 11.16 10 9.87 8.79 8.59 8.28 8 8.31 8.03 7.31 6 4 CPI (General) 2 0

Nov/13 Dec/13 Jan/14 Feb/14 April/14 May/14 June/14 March/14

94 Chapter-1 Current Macro and Micro Economic Condition and Status of Indian Economy

and further to 7.4 per cent in July 2014. This decline in a component that has exhibited stickiness was supported by a tight monetary policy stance. Going forward, while growth revival on a sustainable basis will remain an objective, inflation risks will need to be factored in.

1.2.4 The Indian economy stands at crossroads which can be taken from a slow road to a faster one through greater political stability and a supportive policy framework. The strong policy measures taken by the Government and the RBI have some what stabilized the currency, rebuilt the reserves, and narrowed the excessive current account deficit but the weaknesses in the form of persistent inflation, fiscal imbalances, bottlenecks to investment, and inefficiencies that require structural reform still persist. The Indian economy expanded at its fastest pace in two-and-a-half years in the quarter ending June 2014 on the back of a turnaround in manufacturing. Quarterly GDP at factor cost at constant (2004 - 05) prices for Q1 of 2014 - 15 is estimated at` 14.38 lakh crore, as against ` 13.61 lakh crore in Q1 of 2013-14, showing a growth rate of 5.7 per cent over the corresponding quarter of previous year 4. The growth in the performance of exports (that registered a growth of 11.5 per cent at 2004 - 05 prices), along with the measures taken by the Government, the economy can be expected to show further improvement in the remaining part of 2014 - 15.

Table2: Quarterly Estimate of GDPat Factor Cost in Q1 (April-June) of 2014-15 (at 2004-05 prices)

April - June, 2014 (Q1)

Gross Domestic Product Growth to over Industry for Q1 (Amount in ` crore) previous year Q1 (in percent)

2012 -13 2013 -14 2014 -15 2013 -14 2014 -15

Agriculture, forestry & 1,77,947 1,85,084 1,92,115 4.0 3.8 fishing Mining & quarrying 26,519 25,490 26,016 - 3.9 2.1

Manufacturing 2,08,756 2,06,340 2,13,470 - 1.2 3.5

Electricity, gas & water 26,018 26,999 29,763 3.8 10.2 supply

Construction 1,01,803 1,02,875 1,07,779 1.1 4.8

Trade, hotels, transport & 3,49,478 3,55,018 3,64,809 1.6 2.8 communication Financing, insurance, real 2,55,560 2,88,494 3,18,614 12.9 10.4 estate & business services Community, social & 1,54,140 1,70,458 1,85,922 10.6 9.1 personal services

GDP at factor cost 13,00,221 13,60,757 14,38,488 4.7 5.7

4MosPl- Estimates of Gross Domestic Product for the first quarter (April-June) 2014-15

95 Report on Trend and Progress of Housing in India 2014

1.2.5 The Reserve Bank of India and the Government will need to exercise caution during 2014-15 so that the gains in macro-stability are preserved and the disinflationary momentum gathers traction. Further, for the situation to improve microeconomic policies covering reforms in the areas of industry, services, international trade, labour markets, public sector management, financial markets and competition are needed to work towards improving activity levels and productivity, thus shaping improved supply responses that can help enhance the growth potential. This approach can help in hoping for a sustainable growth of at least 7 per cent in a non-inflationary manner once global growth normalizes.

1.2.6 The financial sector especially the Public Sector Banks need to review their governance structure and market discipline to contain the level of NPAs as percentage of Gross Advances. As per RBI's Financial Stability Report (FSR), June 20145 , India's financial system remains stable, though the banking sector is facing some major challenges, mainly relating to public sector banks (PSBs). The year 2014-15 seems promising. Improved global growth momentum in 2014 and the recent weakening of the rupee should spur exports. Export growth is also expected to pick up as the advanced economies consolidate their growth momentum.

1.3 Indian Economy: Prospects for FY2014-15

1.3.1 As per the Economic Survey 2014-156 , the Indian economy is poised to overcome the sub-5 per cent growth of gross domestic product (GDP) witnessed over the last two years. The growth slowdown in the last two years was broad based, affecting in particular the industry sector. Inflation too declined during this period, but continued to be above the comfort zone, owing primarily to the elevated level of food inflation. Yet, the developments on the macro stabilization front, particularly the dramatic improvement in the external economic situation with the current account deficit (CAD) declining to manageable levels after two years of worryingly high levels was the redeeming feature of 2013-14. The fiscal deficit of the Centre as a proportion of GDP also declined for the second year in a row as per the announced medium term policy stance. Reflecting the above, with much expectations of a change for the better, financial markets have surged. Moderation in inflation would help ease the monetary policy stance and revive the confidence of investors, and with the global economy expected to recover moderately, particularly on account of performance in some advanced economies, the economy can look forward to better growth prospects in 2014-15 and beyond.

1.3.2 The Financial Year 2014-15 has begun on a promising note with IIP growth beginning to look up. The Monetary policy is providing a more stable environment in terms of interest rates, liquidity and credit conditions, with tangible efforts to improve resource flow to productive sectors. The latter includes cuts in statutory liquidity ratio (SLR) and exemptions from regulatory pre-emptions such as cash reserve ratio (CRR), SLR and priority sector lending (PSL) for issuing long-term bonds to finance loans to infrastructure and affordable housing. Export growth has improved, while capital inflows remain adequate. Further, there has been a healthy accretion to foreign exchange reserves that helps insulate the economy against prospective shocks that may be transmitted onshore. The spike in global oil price following the civil war in Iraq was transitory and the oil prices seem to be stable. Overall, the exchange rate has been stable so far in 2014-15.

5 RBI's Financial Stability Report (FSR) June 2014 6 The Economic Survey 2014–15 by Ministry of Finance, Government of India

96 Chapter-1 Current Macro and Micro Economic Condition and Status of Indian Economy

Box 1 : Excerpts from the Economic Survey 2014-15

Fiscal Deficit

l India needs sharp fiscal correction l Need for subsidy reforms for fiscal consolidation l Recommends raising tax-to-GDP ratio for fiscal consolidation l Shortfall in revenues can be contained through better mobilization and reforms l External debt remains within manageable limits

Growth

l GDP growth seen at 5.4-5.9 percent in 2014-15 l Economic growth of 7-8 percent not seen before 2016-17 l Downward risk to economic growth due to poor monsoon, external factors

Inflation

l Government needs to move towards low and stable inflation through fiscal consolidation l Wholesale Price Index (WPI) inflation expected to moderate by end-2014 l Consumer Price Index (CPI) inflation showing signs of moderation l Need to create a competitive national market for food

Balance of Payments

l Improvement in balance of payments position during late 2013-14 was due to import restrictions and economic slowdown l Need to adjust to advanced economies' event exit from accommodative monetary policy stance

Subsidies

l Rationalization of subsidies such as fertilizer and food essential l Need to shift subsidy programme from price subsidies to income support

Taxation

l Government needs to move towards simple tax regime, fewer tax exemptions, single rate of goods and services tax (GST) l GST to play vital role in indirect tax reform

Forex Market

l Intervention in forex market by Reserve Bank of India is behind accumulation of reserves generally

1.4 NHB-RESIDEX-The Residential Property Price Index

Keeping in view the prominence of housing and real estate as a major area for creation of both physical and financial assets and its contribution in overall national wealth, a need was felt for setting up of a mechanism, which could track the movement of prices in the residential housing segment. National Housing Bank, at the behest of the Ministry of Finance, undertook a pilot study to examine the feasibility of preparing such an index at the National level. The pilot study covered 5 cities viz. Bangalore, Bhopal, Delhi, Kolkata and Mumbai, for which index was constructed till the period 2005 taking 2001 as the Base

97 Report on Trend and Progress of Housing in India 2014

Year. Based on the results of the pilot study and recommendations of the Technical Advisory Group (TAG), NHB launched RESIDEX for tracking prices of residential properties in India, in July 2007.

The RESIDEX helps the general consumers and property buyers and borrowers in their decision-making by enabling comparisons over time and across cities and localities based on the emerging trends. The RESIDEX also provides insights into the property market for the lending agencies in their credit evaluation and assessment of the value (present and potential) of the security against the loan. NHB RESIDEX can be a useful indicator for estimating the value of property to be financed and also for assessing the value of security cover on the outstanding loan. Builders and developers may also benefit from the index by assessing the demand scenario in a locality, and mapping the housing needs in different parts of the country. NHB RESIDEX is being well-received from all the corners of the industry e.g. banks, HFCs, Builders & Developers and Government of India.

NHB RESIDEX tracks the movement in prices of residential properties on a quarterly basis. This is being done since 2007. The latest NHB RESIDEX for the quarter April - June, 2014 covers 26 cities,with base year as 2007.

The RESIDEX for the quarterApril-June, 2014 constructed for 26 cities has taken into account the price trends for residential properties in different locations and zones in each city and is based upon the transaction data received from Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI). The data based on actual transactions are put through a Model that depicts the trend in the market. The RESIDEX is expected to bring greater uniformity and standardization as well as greater transparency in the valuation of properties across the industry.

1.4.1 Price Movement for the quarterApril-June, 2014 (26 Cities) : The movement in prices of residential properties for the quarter April-June, 2014 has shown marginal increasing trend in eighteen (18) cities ranging from 0.5% in Bhubaneswar to 3.9% in Pune, and fall in six (6) cities ranging from 0.5% in Lucknow to 4.4% in Chandigarh in comparison to the previous quarter January-March, 2014. Indices for 2 cities namely Hyderabad and Raipur have remained stable.

1.4.2 Rising Trend: Residential housing prices in 18 cities have shown increase in prices in this quarter ended June, 2014 (April-June, 2014) over the previous quarter ended March, 2014 (January-March, 2014). Maximum increase was observed in Pune (3.9%) followed by Coimbatore (3.5%), Indore (3.3%), Guwahati (3.2%), Patna (2.7%), Kolkata (2.4%), Ahmedabad (1.9%), Vijayawada (1.9%), Mumbai (1.8%), Chennai (1.7%), Ludhiana (1.4%), Bhopal (1.3%), Kochi (1.2%), Jaipur (1.0%), Faridabad (1.0%), Bengaluru (0.9%), Nagpur (0.6%) and Bhubaneswar (0.5%).

1.4.3 Declining Trend: 6 cities have shown decline in prices over the previous quarter with maximum fall observed in Chandigarh (4.4%) followed by Meerut (3.6%), Delhi (3.0%), Surat (2.4%), Dehradun (2.1%), and Lucknow (0.5%).

Indices for 2 cities namely Hyderabad and Raipur have remained stable.

98 Chapter-1 Current Macro and Micro Economic Condition and Status of Indian Economy

Table 3: City-wise Housing Price Index for the Quarter April-June, 2014

Jan - Apr- Jul- Oct- Jan - Apr- July- Oct- Jan - April- Mar Jun Sep Dec Mar Jun Sep Dec March June CITIES 2007 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 Index Index Index Index Index Index Index Index Index Index Index Hyderabad 100 86 85 84 90 88 84 88 93 95 95

Faridabad 100 217 217 216 205 207 202 204 209 209 211

Patna 100 129 140 138 151 152 147 150 159 150 154

Ahmedabad 100 164 174 180 191 192 186 191 197 209 213

Chennai 100 304 309 312 314 310 303 318 330 349 355

Jaipur 100 80 78 85 87 112 110 108 105 101 102

Lucknow 100 164 171 175 189 183 187 191 185 194 193

Pune 100 181 200 201 205 221 219 219 235 232 241

Surat 100 144 145 138 150 140 142 145 154 165 161

Kochi 100 72 73 80 87 89 86 86 85 85 86

Bhopal 100 204 207 206 216 230 227 220 223 226 229

Kolkata 100 191 196 191 209 197 189 199 196 206 211

Mumbai 100 190 197 198 217 222 221 222 222 229 233

Bengaluru 100 92 100 98 106 109 108 107 111 107 108

Delhi 100 168 172 178 195 202 199 190 196 199 193

Bhubaneshwar 100 161 164 168 172 197 195 193 202 195 196

Guwahati 100 157 159 158 166 153 147 149 160 154 159

Ludhiana 100 163 171 168 179 167 157 150 150 145 147

Vijayawada 100 184 186 181 185 184 174 167 161 160 163

Indore 100 208 203 196 194 195 184 180 184 181 187

Chandigarh 100 194 191 192 188 183 175

Coimbatore 100 184 178 178 173 170 176

Dehradun 100 183 184 184 186 191 187

Meerut 100 191 189 176 171 165 159

Nagpur 100 163 168 162 175 180 181

Raipur 100 156 155 157 159 166 166

99 Report on Trend and Progress of Housing in India 2014

Chapter 2 Overview of the Indian Housing Sector

2.1 Importance of Housing

2.1.1 Housing, a basic human need, has always had and continues to have major socio-economic implications and assumes a crucial role as it contributes significantly to the national economy and nation building. The need for adequate shelter for all along with basic services is more urgent than ever, particularly in developing countries like India.

2.1.2 Safe, secure and adequate housing is a fundamental need of man. Housing is a key input in economic, social, and civic development. In importance, it is third after food and clothing. A host of vocations and professions directly or indirectly derive their livelihoods from housing which include construction workers, builders, developers, suppliers, civil engineers, valuers, furnishers, interior decorators, and plumbers. Further, indirect impact of housing is in terms of improved habitat, living, educational, social and cultural standards leading to human capital formation and income capabilities. Housing is integrally related to a host of outcomes for the society more broadly beyond those that are financial or material. Quality housing can facilitate psychological and social outcomes such as an ontological security and a sense of control over one's life.

2.1.3 Housing tends to serve as a catalyst for a change in socio-cultural milieu and also aids in economic development. More importantly, housing lays the foundation for a life of dignity. By investing in homes, people, in particular, the low-income groups accumulate equity that can then be used as collateral, making them more credit-worthy for accessing finance through normal channels and also for generating income.

2.1.4 Census 2011 figures reveal that the housing stock has increased form 24.9 crore in 2001 to 33.1 crore in 2011, indicating a growth of 33 per cent. However, housing shortage is posing a challenge, since there is a mismatch between the people for whom the houses are being built and those who need them. As per the estimated housing shortage for 2012-17, urban area have about 95% shortage in economically weaker sections and lower income group categories, whereas rural areas have about 90% shortage in below poverty line category.

Table4 : Estimated Housing Shortage in India: 2012-2017 Urban Housing* Rural Housing** Category Shortage Percentage Category Shortage Percentage (in million) to Total (in million) to Total Economically Weaker 10.55 56.18 Below Poverty 39.30 90.00 Sections (EWS) Line (BPL) Lower Income Group 7.41 39.44 Above Poverty (LIG) Line (APL) 4.37 10.00 Middle Income Group 0.82 4.38 (MIG) Total 18.78 100.00 43.67 100.00

Source : * Urban Housing Shortage (2012-17) Report of the Ministry of Housing & Urban Poverty Alleviation to estimate the Urban Housing Shortage for the 12th Five Year (2012-17) ** Working Group Report on Rural Housing for 12th Five Year Plan (2012-17)

100 Chapter-2 Overview of the Indian Housing Sector

2.1.5 The Indian economy is going through a transition phase of rapid urbanization. For ages the saying was that "India lives in its villages". But now this has begun to change. Though the bulk of the population might still remain in villages, the urban population content is rising. The urban population of India is likely to grow from 285.3 million in 2001 to 533 million in 2025, as per the projections based on past trends. Studies project that by 2030, the total urban population of India will be 590 million i.e. 40 per cent of the Indian population would live in urban areas7 . The projected growth is shown in the graph below.

Graph 3: Projection of Growth of Urban Population in India

1600 1400 1200 1000 800 Urban Population 600 Total Population

(in million) 400 200 0 1991 2001 2008 2030

2.1.6 The number of metropolitan cities with population of 1 million and above has increased from 35 in 2001 to 50 in 2011 and is expected to increase further to 87 by 20318 . The expanding size of Indian cities will happen in many cases through a process of peripheral expansion, with smaller municipalities and large villages surrounding the core city becoming part of the large metropolitan area. The urbanization trend is going to have fundamental impact on the political, economical and social situations of the country. Critical issues in urbanization include lack of basic infrastructure such as roads, sanitation and drinking water systems, transport, affordable housing, slums and squatters, internal migration and inclusive cities. Thus, there is a need to create safe, secure and affordable housing for the urban masses for the growth and development of the country and to create a more inclusive society. It is felt that, addressing housing shortage and improving affordability is an integral part of the policy measures towards sustainable urban development. In order to improve the quality of life, it is of critical significance that the housing stock is improved through urban renewal, in situ slum improvement and development of new housing stock in existing cities as well as new townships, etc., which meets the housing demand.

2.1.7 The importance of housing investment in the national economy and rapid growth of housing investment have become distinct characteristics of the world economies in recent years. However, at the same time, there is a concern that economic growth, if heavily dependent on housing investment, may compromise the stability and the health of the national economy.

2.1.8 Granger causality analysis through statistical hypothesis test has confirmed the interaction between housing investment and economic growth as well as that between non-housing investment and economic growth. It has been found that housing investment has a stronger short run effect on economic growth than non-housing investment. It has also been found that housing investment has a long run effect on economic growth while economic growth has a long run effect on both housing and non-housing investment. The findings suggest that housing investment is an

7India Urbanization Econometric Model; McKinsey Global Institute analysis 8Report on Indian Urban Infrastructure and Services

101 Report on Trend and Progress of Housing in India 2014

important factor contributing to short-term fluctuations of economic growth, with its growth stimulating the economic growth and its slump leading to downside fluctuations.

2.1.9 Since 1970s, housing has come to be recognised as an important contributor to growth. This was not because of the fact that house-building industry was a major employer with large multiplier effects but also due to the fact that housing was increasingly seen to have social consequences with diverse economic effects. The contribution and use of decent housing affects economic growth and economic development through its impact on employment, savings, investment and labour productivity in a positive manner.

Box 2: Study on Impact of Investments in the Housing Sector on GDP and Employment in the Indian Economy

National Council of Applied Economic Research (NCAER) launched the Report in April 2014 on the Study on Impact of Investments in the Housing Sector on GDP and Employment in the Indian Economy. The Study was supported by DFID, UK and Ministry of Housing and Urban Poverty Alleviation, Government of India. As per the Report, the construction sector is disaggregated into residential construction, non-residential construction and other construction sector and the residential construction sector is treated as housing sector.

The key findings in the Report, include -

a. The residential construction (housing sector) accounts for

l 1.24% of the total output of the economy (total construction sector is 11.39%)

l 1.00% of GDP (total construction sector is 8.2%)

l 6.86% of the employment (total construction sector is 11.52%) b. Housing sector is fourth largest employment generating sector. c. 99.41 per cent of the jobs in housing sector are informal jobs. d. Its labour to output ratio i.e. number of persons employed to produce a lakh units of output, is 2.34 and is the highest among all the sectors. e. For every lakh invested in the housing sector, 2.69 new jobs (2.65 informal and 0.4 formal) are created in the economy. With induced effect, the number of jobs created would be 4.06 (3.95 informal and 0.11 formal). f. For every`1.00 investment in the housing sector, the household income increases by` 0.41. With induced effect, this is estimated to be` 0.76. g. Every additional rupee invested in the housing sector can add` 1.54 to the GDP and with household expenditure considered, this is going to add` 2.84. h. For every rupee invested in creation of housing,` 0.12 gets collected as indirect taxes.

2.2 Issues Concerning Housing in India

2.2.1 Housing shortage has always been a major problem over the years in our country since independence. Such shortage estimated as excess households over houses including houseless households, congestion (number of married couples requiring separate house), and replacement/ up-gradation of kutcha/ unserviceable kutcha houses and obsolescence/ replacement of old houses, etc., which has grown over the decades.

102 Chapter-2 Overview of the Indian Housing Sector

2.2.2 The extent of urbanization in India is much lower than other developing countries; with only over 31% of the population residing in urban areas. As per the Census data for 2011, the urban population in India was over 377 million or 31.1% of the total population residing in 475 urban agglomerations. The inability of our society to keep pace with the increase in population has resulted in an under-supply of housing units, which in 2012 was estimated by the Ministry of Housing and Urban Poverty Alleviation (MoHUPA) at 18.78 million units of which nearly 95% relates to the economically weaker sections (EWS) and low income group (LIG) of the urban population. By 2021, the urban population is expected to increase to nearly 500 million, about 35% of the total population of India. The 2011 Census has enumerated that 13.9 million households with a total population of nearly 65.5 million people reside in slums in Indian cities. Rural migration is considered to be one of the most important contributors to the growth in the slum population. The number of people and the percentage of population employed in agriculture are on a steep downward curve, reducing from 259 million (almost 57%) in 2004-05 to 243 million (about 50%) in 2012-13. Despite the continued large scale migration of the rural poor to urban areas, the Twelfth Five Year Plan (2012-17), has estimated the total housing shortage in rural areas at 43.67 million units. The slum population in India was projected to be 94.98 million in 2012 and is expected to touch 104.67 million by 2017. This increase in population, if not matched with the required increase in housing units could contribute to the development of further slums in urban areas, creating a social problem and becoming detrimental to the overall health of the Indian economy. Hence, the total housing demand in the country by 2017 could be as high as 88.78 mn units. Creating flexible affordable housing with certain percentage reserved for rental schemes might provide a faster solution for a slum-free India. In cities such as Mumbai, affordable housing can be mainly developed through the redevelopment of existing slums due to the severe paucity of developable land.

2.2.3 Affordable, suitable, adequate and equitable housing is a major priority for governments all over the world. However, even though housing is a basic necessity of life, more than half of the population lives in sub-standard houses where they have no access to adequate sanitary facilities, water and warmth to meet their daily physical needs. Owning suitable shelter is usually very expensive for common households.Affordability of building is affected by land accessibility, land cost, high cost of mortgage, institutional coordination with regard to infrastructural development, government approval procedures and availability of finance. Hence, strategies need to be initiated and adopted at the governmental level to deal with the issues relating to land cost, institutional development and legislation, and make the housing products available to the masses at affordable cost.

2.3 The Indian Housing Finance Market

2.3.1 In the Indian context, the housing finance system has been rapidly evolving. The sector is largely driven by the aspirations of people in all income segments who desire to own a house early in their lives. The capacity of the lending institutions has grown over the years as the mortgage segment has proved to be promising and profitable and increasingly bankable. The market is big and growing on account of factors such as rapid urbanization, population migrating to urban centers, and demographic composition. The growth and evolution of the sector are marked by challenges and opportunities for the various stakeholders. While the financial sector (demand side) is fairly unified under the governance of a central regulator, the construction activities and land resources (supply side, or the real economy) and their governance are decentralized and somewhat fragmented. This has thrown up regulatory challenges often resulting in multiple regulations. This tends to affect the efficiency of the market, while inducing some unintended distortions that limit

103 Report on Trend and Progress of Housing in India 2014

the market potential. However, it is widely recognized that the Indian mortgage finance market has withstood the stress and pressures resulting from the ongoing global crisis. This is evidenced by the sustained robust growth of the sector despite recessionary trends in several quarters of the domestic economy. The quality of assets in the housing sector has been consistently good, as reflected in the low level of non-performing loans, though the coverage has progressively expanded across the population and geographical regions. While the market has become more engaging for the lenders, the need for a good balance between regulation and development cannot be overemphasized in the larger context of the economic imperatives and the national priorities of the government.

2.3.2 The 1990s have been very eventful for India, more particularly in terms of the financial sector reforms that paved the way for better play of 'market forces' as the economy made the transition from a controlled and regulated regime to a liberalized and open regime. The Government's progressive 'hands off' approach has led to a greater role for market forces in the economy. The changes have been path-breaking and have involved institutions, policies, systems and practices. This has not been an easy transition as the developmental objectives of the Government needed to be addressed through the market mechanism. This in itself has been a challenge which has involved prioritization in terms of social needs and market capabilities.

2.3.3 The evolution of the housing finance system in India amid this broader transition in the economy had to be carefully and diligently guided through these difficult years. 'Housing' has historically been a social priority next only to food and clothing. The social connotation of the housing sector also had to undergo a transformation to reflect the spirit and potential of a liberalized and market oriented system. There is need for long term sustainable solutions through policy interventions instead of short term solutions driven by short term objectives as the latter may lead to malfunctioning of the housing finance market in the future. The cost has to be met eventually by the market. With appropriate care and responsive regulations, the tension between 'regulation' and 'development' can be considerably eased to enable the market to deliver optimum results.

2.3.4 The Indian housing finance market is today among the more robust and vibrant segments of the Indian economy. The Indian housing finance market has developed only in the past three decades or so, as prior to the late 1980s there was virtually no housing finance market to speak of. In the past three decades, particularly the period post-1987 (i.e. after establishment of the National Housing Bank), the housing finance market in India has grown phenomenally, enjoying double digit year- on-year growth and achieving vibrancy in terms of a larger number of players and products to serve different segments of the market. During these years, the regulatory philosophies of the National Housing Bank and the Reserve Bank of India (the central bank of India and regulator of all banks operating in the country) have been constantly changing and evolving as per the needs of the sector and market environment, domestic and global.

2.3.5 Housing finance problems began to surface as early as the 1970s. The Indian Government has taken various initiatives over time to address these problems. Prior to the establishment of NHB in 1988, the housing finance market in India was characterized by centralized directed credit. The Central/State Governments were operating a number of subsidized housing schemes and loan schemes which were meant for industrial workers, economically weaker section of the society and slum dwellers. However, the loan schemes were targeted for the people in the low-income group as well as rental housing schemes for State Government employees. The following institutions are providers of market-based housing finance solution, in one form or another:

104 Chapter-2 Overview of the Indian Housing Sector

Commercial Banks are the largest mobiliser of savings with wider network coverage. Their role had traditionally been earlier limited to providing the working capital needs of business, industry and commerce and hence, they were not active participants in the housing finance market. Another reason was that they were funded by short-term resources, which could not be profitably employed in long term lending. However, Banks today are the major lenders to housing sector, accounting for nearly 67% of the market. As a result of concreted efforts by NHB, RBI and Central Government towards development of stable housing finance, Banks now have much larger housing loan portfolios and are quite bullish on this product segment. Also the Banks by way of their risk monitoring and responsible lending, have been able to manage overall NPA levels, making them strong reason to continue to lend to this sector.

Housing Finance Companies are companies with principal objective of lending for housing finance. However, the noticeable aspect revealed is that there are only about 20 companies accounting for greater than 90% of total housing loans provided.

The NHB operates as the principal agency for promoting, regulating and providing financial and other support to HFCs at local and regional levels, while banks and NBFCs are managed and regulated by the RBI. As on June 30, 2014, 59 companies have been granted certificates of registration by NHB to act as HFCs. Over the years, the market share of housing finance companies (HFCs) has significantly come down vis-à-vis banks on account of considerable depth and reach of the banking sector in all parts of the country, including rural areas and their lending at more competitive costs. They have also exploited the potential of cross selling across their already existing large customer base and vast network of branches. Though the bank's portfolio over the recent years have shown robust growth in disbursements in the retail housing loan market, HFCs have also grown steadily over the years in a largely stable and regulated market environment, supported with their strong origination skills and diverse channels of sourcing business. Over the last few years, NHB has launched various refinance schemes to promote institutional financing of the rural and urban low-income housing segments. Examples of such schemes include Rural Housing Fund (RHF), Urban Housing Fund (UHF), and Special Refinance Scheme for Urban Low Income Housing.

With sharper focus on collections and recoveries, the quality ofasset of HFCs was maintained well in the FY 2013-14. Although HFCs have been able to maintain their asset quality so far in a difficult operating environment, given the increasing focus of some players on relatively risky products/customer segments and a large-ticket developer loan book, it is expected that there will be some increase in the HFCs' non- performing assets (NPAs) from the current levels. However, overall, the gross NPA percentage is expected to remain around range over the medium term.

Cooperative Banks deploy funds from a common pool of resources to provide for various needs of its members. In Indian scenario, a lot of reluctance has been noticed by these cooperative banks to provide loans for housing finance. The major reason for this is the high risk and illiquidity in giving housing loans from common corpus.

Regional Rural Banks were not active in housing finance because of the involvement of large amount and assessment of creditworthiness coupled with fear of illiquidity and losses. However, now they have been active and their share in housing finance is increasing.

Agricultural and Rural Development Bank's major function is not the provision of housing finance and they maintain low profile.

105 Report on Trend and Progress of Housing in India 2014

Box 3: Report on "Scaling Up Housing Microfinance" by NHB in collaboration with IFMR Capital and DFID, UK.

The Bank collaborated with IFMR Capital and DFID UK to carry a study on "Scaling up of Housing Microfinance in India" with the objective of evaluating NHB's housing microfinance programme and studying the savings pattern of select informal sector households. Further, the study endeavored to develop a savings-linked housing finance product and understand the potential of the SHG-Bank Linkage model for a housing finance product. The study examined microfinance institutions and non-government organizations working in the area of housing microfinance in ten states.

Major Recommendations of the Study, include -

a) Wholesale Financing- Funding Model l In order to enable continuous and dependable flow of finance for wholesale financing of housing microfinance, the funding model proposed in this study is based on the principles of incentive alignment and active risk management. l It is imperative that for the purpose of ensuring an efficient system design for housing microfinance, a structure is built where there is first loss provision from the originator MFI. l In order to facilitate confidence amongst banks to lend through the MFIs, a structure where NHB provides a second loss protection in the form of a guarantee is much required. The idea is to partner with a forward looking bank and demonstrate a model of funding which can then be replicated in future by other guarantee agencies partly replacing the NHB in its role as the second loss provider in the structure.

b) Role of the National Housing Bank l Significant support from NHB would be required to train the NGO-MFI staff on helping their clients in formalizing their land titles during the course of the loan disbursal process. l NHB should proactively work towards developing sound financing structures to support the program. Providing second loss guarantees that add an additional line of protection for participating banks, would incentivize banks to participate in such a program, while at the same time ensuring that the banks retain risk over and above the first loss provided by the NGO-MFI and second loss from the NHB. l NHB should also consider continuing its focus on capacity building specifically targeting NGO-MFIs for this purpose. Assistance in the form of imparting skills required for originating housing loans as a departure from the conventional group liability product would be key in ensuring that the NGO-MFIs originate high quality loans. l The NHB has to play a role in training staff on institutionalizing the process of formalizing land titles. This would not only have a widespread impact on the land rights of the lower income households but would also unlock a huge market which currently is served by the informal sources of finance. In addition, the housing finance companies will have a larger market of properties with good title to finance. l The NHB has a large mandate and may not be able to keep a strong operational control on a widespread program. It may consider the role of piloting and demonstrating the model suggested above so that it can be replicated by others. l There is a clear need for institutions which can keep a direct tab on the NGO-MFI partners and push improvement. In scaling up the housing microfinance program, NHB can consider partnering with market participants, such that NHB plays the role of a facilitator and enabler.

106 Chapter 3 Policy Environment for Housing and Housing Finance

3.1 Concept ofAffordable Housing

3.1.1 Affordable housing refers to housing units that are affordable by that section of society whose income is below the median household income. Though different countries have different definitions for affordable housing, but it is largely the same, i.e. affordable housing should address the housing needs of the lower or middle income households. Affordable housing becomes a key issue especially in developing nations where a majority of the population is unable to buy houses at the market price. Disposable income of the people remains the primary factor in determining the affordability. As a result, it becomes the increased responsibility of the Government to cater to the rising demand for affordable housing. The Government of India has taken various measures to meet the increased demand for affordable housing including stressing on Public-Private Partnerships (PPP) for development of these units.

3.1.2 The need to facilitate supply of affordable housing to the unserved population and to encourage broad based home ownership through a right mix of policy initiatives cannot be overemphasized. In this context, the role of the Governments (both Central and State), financial institutions in terms of deliberate policies and interventions, is to create an enabling environment for the private sector, so as to facilitate realization of affordable and decent housing for all. The Government of India's focus through various housing policies schemes and funds is to increase housing stock and provide low cost housing finance to the under served and unserved. Housing has been an important subject in the Five Year Plans and specific Schemes such as Indira Awas Yojna, Golden Jubilee Rural Housing Finance Scheme, etc. and funds such as Rural Housing Fund, Urban Housing Fund, etc. have been formulated/created in order to promote affordable housing.

3.2 The Role of DifferentAgencies towardsAffordable Housing

3.2.1 Role of Central Government: The National Urban Housing & Habitat Policy 2007 (NUHHP- 2007) seeks to promote various types of Public-Private Partnerships for realizing the goal of "Affordable Housing forAll" with special emphasis on the urban poor. Given the magnitude of the housing shortage and budgetary constraints of both the Central and State Governments, the NUHHP, 2007 focuses the spotlight on multiple stake-holders. Specific roles have been envisaged under the policy for various stakeholders, which are as under:

l To play a role of enabler and facilitator and ensure that private sector is enthused to take up affordable housing projects. l To advise and guide respective State Governments to adopt and implement the National Urban Housing & Habitat Policy in a time bound manner. l To promote balanced regional development in the country by suitably decentralizing functions relating to development of the Housing Sector and promotion of an ecologically sound habitat. l To develop suitable financial instruments for promotion of housing for the EWS and LIG groups serviced by basic amenities.

107 Report on Trend and Progress of Housing in India 2014 l To promote action plans for creation of adequate infrastructure facilities relating to water, drainage, sanitation, sewerage, power supply and transport connectivity. l To develop economically viable housing promotion models and standards for provision of physical, social and economic services. l To develop suitable fiscal concessions in collaboration with the Ministry of Finance for promotion of housing and urban infrastructure with special focus on EWS/LIG beneficiaries.

3.2.2 Roles of State Governments: l To prepare the State Urban Housing and Habitat Policy. l To ensure suitable flow of financial resources to potential EWS/LIG beneficiaries as well as undertake viability gap funding of large housing and habitat development projects. l To prepare medium term and long term strategies for tackling problems relating to provision of adequate water supply, drainage, sewerage, sanitation, solid waste management, power supply and transport connectivity. l To promote and incentivize decentralized production and availability of local building materials. l To prepare and update Master Plans along with Zonal Plans, Metropolitan Plans, District Plans and the State level Regional Plan by respective agencies with provision of adequate land for urban poor. l To promote well designed Public-Private Partnerships for undertaking housing and infrastructure projects. l To act as a facilitator and enabler in collaboration with ULBs/Parastatals/ Private Sector Cooperative Sector / Non-Government Organizations (NGOs) with regard to Integrated Slum Development Projects as well as Integrated Township Development Projects. l To encourage Cooperative Group Housing Societies, Employees Organizations, labour housing promotion organization, NGOs and Community Based Organizations (CBOs) to have Partnerships with Urban Local Bodies / Parastatals in relation to housing related micro-finance and housing development.

3.2.3 RolesofFinancialInstitutions: l To reassess their strategies with a view to make them more inclusive in terms of EWS and LIG segments l To promote innovative financial instruments l To enhance/ strengthen the income spread of housing loans portfolio to increasingly cover BPL and EWS beneficiaries. l To adopt a more flexible and innovative approach in relation to credit appraisal norms. l To Develop financial products which encourage EWS and LIG beneficiaries to take insurance cover. l To plough part of their resources towards financing slum improvement and up-gradation programmes. l To devise innovative housing finance schemes for targeting the EWS and LIG segments, with suitable subsidy support from the Government. l To promote MFIs and SHGs for mobilizing savings and play a significant role in housing finance sector.

108 Chapter-3 Policy Environment for Housing and Housing Finance

3.3 Recent Housing Schemes Implemented by the Government of India

3.3.1 The initiatives by the Government of India like allowing FDI up to 100 per cent in development projects for townships and settlements, approval of the Real Estate (Regulation and Development) Bill, 2013, setting up the Urban Housing Fund and impetus to Subsidy Schemes like the Rajiv RinnYojanahave further strengthened the sector.

3.3.2 The recent budget announcements related to housing sector have been encouraging. An allocation of`` 8,000 crore to support rural housing and 4,000 crore for affordable housing to the urban poor/EWS/LIG segment through NHB, will increase the flow of cheaper credit for housing. Further, the Government has mandated to provide 'Housing for All by 2022'. With this objective the Hon'ble Finance Minister in his Budget Speech announced the setting up of a Mission on Low CostAffordable Housing, which will be anchored by the National Housing Bank. The scheme will incentivize the development of low cost affordable housing.

3.3.3 Similar Policy-based efforts like providing tax sops for the Real Estate Investment Trusts (REITs), as announced in the Union Budget of 2014-15, could result in extracting new growth opportunities through Rental, Affordable and Senior Citizen Housing projects that can increase the depth of the industry. REITS have been successfully used as instruments for pooling of investment in several countries and such instruments will definitely attract long term finance from foreign and domestic sources including the NRIs. REITs would reduce the pressure on the banking system while also making available fresh equity.

Box 4: Announcements related to Housing Sector in the Union Budget 2014-15

l Allocation for National Housing Bank increased from`` 6,000 to 8,000 crore to support Rural housing.

l ` 4,000 crore allocated to NHB from the priority sector lending shortfall with a view to increase the flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment

l Extended additional tax incentive on home loans to encourage people, especially the young, to own houses.

l Mission on Low Cost Affordable Housing will be anchored by the National Housing Bank

l Slum development to be included in the list of Corporate Social Responsibility (CSR) activities to encourage the private sector to contribute more.

l Master planning of 3 new smart cities in the Chennai-Bengaluru Industrial Corridor region, viz., Ponneri in Tamil Nadu, Krishnapatnam in Andhra Pradesh and Tumkur in Karnataka to be completed. Development of industrial corridors with emphasis on Smart Cities linked to transport connectivity to spur growth in manufacturing and urbanization will be accelerated.

l ` 7,060 crore is provided in the current fiscal for the project of developing "one hundred Smart Cities'

l Incentives for Real Estate Investment Trusts (REITS), complete pass through for the purpose of taxation and a modified REITS type structure for infrastructure projects as the Infrastructure Investment Trusts (InvITs), may attract long term finance from foreign and domestic sources including the NRIs.

109 Report on Trend and Progress of Housing in India 2014

3.3.4 The major policies/schemes implemented by the Central Government in housing are as outlined below:

3.3.4.1 The National Urban Housing & Habitat Policy, 2007 strives to promote equitable distribution of land, shelter, and services by promoting "various types of public-private partnerships for realizing the goal of affordable housing for all"

3.3.4.2 The Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a Central Government Program launched in collaboration with various State Governments and Urban Local Bodies, supports 63 cities across the country. The focus of the programme is on improving efficiency in urban infrastructure services delivery mechanism, community participation and accountability of Urban Local Bodies. The Bharat Nirman programme, launched in 2005, is continuing its focus on the provision of basic amenities like drinking water, roads, irrigation facilities, electricity and the construction of houses in rural areas through its six flagship programmes.

3.3.4.3 The Indira Awas Yojana (IAY) is focused on the provision of cash subsidy to rural BPL families for construction of dwelling units using their own design and technology. The funding under the Scheme is provided by the Centre and State in the ratio of 75:25 respectively.

3.3.4.4 To improve the affordability of housing loans to EWS/LIG segments in urban areas, Ministry of Housing and Urban Poverty Alleviation (MoHUPA), Government of India implemented Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) on December 26, 2008 to provide home loan to EWS/LIG persons for acquisition/construction of house. The Scheme provided a subsidy of 5% for a loan amount up to` 1 lakh for the entire tenure of loan on an upfront basis. The Central Nodal Agencies (CNA) for the scheme were National Housing Bank (NHB) and Housing & Urban Development Corporation Ltd. (HUDCO). The Scheme was closed w.e.f. September 30, 2013.

3.3.4.5 MoHUPA, Government of India revised Interest Subsidy Scheme and renamed it as Rajiv Rinn Yojana (RRY), as an additional instrument for addressing the housing needs of EWS/LIG segments in urban areas with increase in limit of eligible housing loans from ``1 lakh to 5 lakh. Rajiv Rinn Yojana is effective from October 1, 2013. Under RRY,the amount of loan has been revised up to`` 5 lakh for EWS and 8 lakh for LIG beneficiaries. However, the interest subsidy of 5% is made available on a maximum loan of` 5 lakh for both categories of beneficiaries. The eligible lending institutions under the scheme are SCBs, HFCs and RRBs. NHB and HUDCO are the 2 nodal agencies under the Scheme. Under RRY,The economic parameter of EWS is defined as households having an average annual income up to` 1,00,000/- and the economic parameter of LIG is defined as households having an average annual income between`` 1,00,001/- up to 2,00,000/-. This will be subject to revision by the Steering Committee of the Scheme from time to time.

3.3.4.6 1% Interest Subvention Scheme: In order to stimulate demand for credit for housing in the lower & middle income segment of population in the country, Government of India, Ministry of Finance w.e.f. October 01, 2009, implemented interest subvention of 1% for one year (first 12 months) on all individual housing loans upto` 10 lakh, provided the cost of the unit does not exceed` 20 lakh, which continued till FY 2010-11. The Scheme was further extended for FY 2011-12 and FY 2012-13 with increase in limit of housing loans upto`` 15 lakh and cost of house upto 25 lakh from` 10 lakh and` 20 lakh, respectively. The Scheme ceased to be in operation from April01, 2013. The loans provided by the

110 Chapter-3 Policy Environment for Housing and Housing Finance

lending institutions upto March31, 2013 were/are eligible for the interest subsidy under the Scheme. All regions of the States and Union Territories in the country, including rural and urban areas were covered under the Scheme. The Scheme was implemented by SCBs, HFCs and RRBs. During the initial period of the Scheme, RBI and NHB were designated as Nodal agencies for SCBs and HFCs, respectively. NHB was designated as the sole nodal agency for SCBs and HFCs from FY2011-12.

3.3.4.7 The Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH) has been set up and registered by Government of India on May 01, 2012 under the aegis of the Government of India, Ministry of Housing and Urban Poverty Alleviation (MoHUPA). The Trust is managed by NHB and MoHUPA,with Government of India as the "Settler" of the Trust.

The Trust has an initial Corpus Fund of` 1 lakh contributed by the Settler. Further contribution will be made to the initial corpus by the Settler and the State Governments, who draw on it in accordance with slum population, i.e.` 1,000 crore in the aggregate by the Settler and` 200 crore by the State Governments.

As on June 30, 2014, MoHUPA, as Settler, has contributed` 150 crore towards the corpus fund of the Trust. Credit Risk Guarantee Fund Scheme (CRGFS) for low income housing has also been notified by MoHUPA,vide Gazette Notification dated July 7-13, 2012.

CRGFS provides guarantee for housing loan upto` 5 lakh sanctioned and disbursed by the lending institutions without any collateral security and/or third party guarantee to the new borrowers in the EWS/LIG categories in urban areas for home improvement/acquisition and purchase of new or second hand dwelling unit/construction/extension of an affordable dwelling unit with carpet area not exceeding 430 sq.ft. (40 sq.m.). The guarantee cover available under the Scheme is to the extent of 90% of the sanctioned housing loan amount upto`` 2 lakh and 85% for loan amounts above 2 lakh and upto` 5 lakh. The lending institutions eligible to avail benefit of the Guarantee cover under the Scheme of the Fund Trust are SCBs, RRBs, UCBs, NBFC-MFIs, Apex Cooperative Housing Finance Societies registered under the State Co-operative SocietiesAct and HFIs registered with NHB. As on June 30, 2014, 47 institutions have signed Memorandum of Understanding (MoU) with the Trust under the Scheme.

The major objective of the Trust is to guarantee housing loan up to` 5 lakh sanctioned and disbursed by the lending institutions without any collateral security and/or third party guarantee to the new borrowers in the EWS/LIG categories in urban areas. Therefore, it will act as a risk mitigant for lending institutions (Members of the Scheme) and will help increasing the scope of lending by Member Lending Institutions (MLIs) for low income housing for EWS/LIG segments.

The housing loans provided by MLIs to these segments which are covered under the CRGFS, entails them of certain benefits under prudential norms e.g. Zero Risk Weight, no NPA provisions etc. This means lesser requirement of CRAR for this loan portfolio. Therefore, it is expected that the benefits to MLIs will be passed on to the intended beneficiaries under the Scheme helping EWS/LIG borrowers in acquiring/construction of affordable housing units.

Further, the Scheme is applicable for the eligible housing loans extended by the lending institution in urban areas. The coverage under urban areas may extend to statutory towns, urban agglomerations and planning areas. The descriptions of statutory towns, urban agglomerations and planning areas are given below:

111 Report on Trend and Progress of Housing in India 2014 l Statutory Towns: Place with a municipality, corporation, cantonment board or notified town area committee, etc., of urban unit is known as Statutory Town. These towns are notified under law by the concerned State/UT Government and have local bodies like Municipal Corporations, Municipalities, Municipal Committees, etc., irrespective of their demographic characteristics as reckoned on December 31, 2009, Examples: Vadodara,Shimla etc. l Planning Area means a planning area or a development area or a local planning area or a regional development plan area, by whatever name called, or any other area specified as such by the appropriate Government or any competent authority and includes any area designated by the appropriate Government or the competent authority to be a planning area for future planned development, under the law relating to Town and Country Planning for the time being in force. l Urban Agglomeration is a continuous urban spread constituting a town and its adjoining outgrowths (OGs), or two or more physically contiguous towns together with or without outgrowths of such towns. An Urban Agglomeration must consist of at least a statutory town and its total population (i.e. all the constituents put together) should not be less than 20,000 as per the 2001 Census. In varying local conditions, there were similar other combinations which have been treated as urban agglomerations satisfying the basic condition of contiguity. Examples: Greater Mumbai UA, Delhi UA, etc.

3.3.4.8 Capital Subsidy Scheme for Installation of Solar Water Heating and Solar Lighting Systems in Homes

With a view to promote the use of solar energy in the domestic context, the Ministry of New and Renewable Energy (MNRE), Government of India, is implementing a capital subsidy scheme, under its Jawaharlal Nehru National Solar Mission (JNNSM). The Scheme aims at popularizing the use of solar water heating and solar lighting systems in homes by offering suitable incentives in the form of capital subsidies for purchase and installation of the solar systems. NHB has been designated as a nodal agency for administering and monitoring the capital subsidy scheme.

The Scheme has commenced from April 01, 2014 and loans disbursed on or after April 01, 2014 are eligible to be covered under the Scheme. The Scheme will be valid till December 31, 2015, or such extended period as may be allowed by the Government of India.

The subsidy component is limited to 30% of the benchmark cost in case of solar water heating systems [subject to max. of 500 lpd per house]. In case of solar home lighting system, it is limited to 40% of the benchmark cost for units up to 300 watts capacity and 30% of the benchmark costs for units above 300 watts to 1000 watts. The benchmark cost is prescribed by MNRE from time to time.

The institutions eligible to participate in the Scheme include HFCs, SCBs, RRBs, Scheduled Urban Cooperative Banks (UCBs),ACHFs andARDBs.

3.3.4.9 Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI): To prevent frauds in loan cases involving multiple lending from different banks/HFCs on the same immovable property, the Government has facilitated setting up of the CERSAI under the SARFAESIAct, 2002. This Registry has become operational with effect from March 31, 2011. The objective of setting up the Central Registry is to provide a database of security interest over property rights to secure loans and advances granted by banks and financial institutions. Availability of encumbrance status, inter alia, help in preventing frauds involving cases where loans are taken from different lenders against the same property by creating multiple mortgages by deposit of title deeds as well as fraudulent sale of property without disclosing the security interest over such property.

112 Chapter-3 Policy Environment for Housing and Housing Finance

3.4 Select State Level Initiatives in Housing

The State Governments have also taken various initiatives towards providing housing to all through different schemes and policies. These schemes sometimes complement the existing Central Government Schemes. State Level initiatives of select States are outlined below:

3.4.1 West Bengal

The Department of Housing, Government of West Bengal undertakes various activities mainly relating to the framing and implementation of various Social Housing Schemes through the Directorate of Housing and West Bengal Housing Board9 . VariousSchemes active in the State are:

l 'Gitanjali' and 'Amar Thikana': Housing Department of Bengal shall take up construction of 20,000 (twenty thousand) flats for minority people and 10,000 (ten thousand) houses for the fishermen. With a view to provide proper shelters free of cost to the poor, the Housing Department of the Government has laid proper focus on construction of houses for the Economically Weaker Section of people. This Scheme is being implemented in the rural areas and non-Municipal urban areas in coordination with seven other Government Departments under the name of 'Gitanjali' and 'Amar Thikana'.

The objective of the Scheme is to provide proper shelters to the economically weaker section of society as well as to create additional employment opportunities for construction workers, etc. The cost of such dwelling units for new construction on beneficiary's land in rural areas varies across the span and terrain of the State

Panchayat and Rural Development Department is implementing the Scheme 'Amar Thikana' at a unit cost of`` 45,000/- for the plain areas and 48,500/- in hills, difficult areas and coastal areas. Families with monthly income of` 6,000/- or less are benefitted under the Scheme.

l Adhikar: The Housing Department decided to implement Low Income Group (LIG) Housing Schemes directly to solve the accommodation problem of the LIG people especially the minority people residing in urban areas. To mitigate the accommodation problem of the Middle Income Group people residing in urban areas, the Housing Department has taken up a programme for construction of some MIG Housing Schemes on rental basis. The Housing Department at present maintains about 34,000 flats of various categories throughout West Bengal. In 2012-13, the State Government has also piloted one special scheme "Adhikar", conceptualized by the State Government.

During 2013-14, more than 250,000 lakh houses were completed under the IAY and Adhikar Scheme. Since May, 2011, 83,000 houses have been constructed under the Gitanjali Scheme for Economically Weaker Sections (EWS) with total cost of around `1,000 crore. By January 2014, 507,807 household latrines, 6,190 school toilets, 4,168 Anganwadi toilets and 116 sanitary complexes for women were constructed.

Apart from this the Department has decided to construct Night Shelter-cum-Bus Shelter- cum-Pay & Use toilet throughout the state at every 50 kilometers of the National Highways, State Highways and other important roads for the passengers, especially the women undertaking their journey by road.

9 Housing Department, Government of West Bengal (http://www.wbhousing.gov.in/)

113 Report on Trend and Progress of Housing in India 2014

l 'Nijo Griha Nijo Bhumi Prakalpa': A new State Plan Scheme, 'Nijo Griha Nijo Bhumi Prakalpa' was introduced to provide housing to all landless & homeless families. Total number of homestead pattas distributed under NGNB (a new scheme launched in October, 2011) up to March, 2013 was 60,193 covering 2,421 acres of land. During the period 2011- 12, agricultural pattas were distributed among 7,912 beneficiaries while during the period 2012-13, the total number of agricultural pattas distributed was 35,461. Pattas have been distributed to the eligible beneficiaries.

l Housing Schemes under Backward Region Grant Fund (BRGF): With a view to make the Housing programme for Economically Weaker Section of people (EWS) more effective and to address the problem of regional imbalances in respect of housing for poor people, special stress has been given to the Backward regions (Districts) of the State. Construction work of houses has been proposed under Special Grant from BRGF for construction of 34,758 dwelling units in the eleven (11) backward districts of the State (Purulia, Paschim Medinipur, Purba Medinipur, Bankura, Jalpaiguri, Birbhum, South 24 Parganas, Malda, Mursidabad, North Dinajpur and South Dinajpur). The proposal has been sanctioned by the Planning Commission of the Government of India. The scheme has started in the year 2012-13.

The State is committed to provide affordable housing to people specially belonging to Below Poverty Line (BPL), Economically Weaker Section (EWS), Backward Classes and Minorities. As a step forward, West Bengal Housing Infrastructure Development Corporation (WBHIDCO) with Bengal Shapoorji Housing Development Pvt Ltd is engaged in the largest Public Private Partnership (PPP) housing project at New Town, Rajarhat. This project 'Sukhobrishti' is largest in eastern India and meant for EWS and LIG category of population.

3.4.2 Maharashtra

The State has taken special initiative to provide houses to the citizens belonging to the poor and weaker sections of the society10 . In order to overcome the housing problems in urban areas, the State has established Maharashtra Housing and Area Development Authority (MHADA) and City & Industrial Development Corporation (CIDCO) Limited. Besides this, the Slum Rehabilitation Authority (SRA) has been set up with an objective of constructing houses for slum dwellers in urban areas of the State. Indira Awas Yojana, Rajiv Gandhi Gramin Niwara Yojana, etc. are being implemented in the rural areas of the State to provide quality houses to the people belonging to the BPLfamilies and weaker sections of the society.

l Maharashtra Housing & Area Development Authority: MHADA plays an important role in housing development by providing houses in Mumbai and some parts of the State at affordable prices. Upto March, 2013, MHADA has constructed and redeveloped 4,34,538 dwelling units.

l City and Industrial Development Corporation Limited: CIDCO is implementing development programmes covering housing for all sections of the society and providing infrastructures like schools, hospitals, community centers, etc. Upto December, 2013, CIDCO has constructed a total of 1,78,128 tenements in Navi Mumbai, Aurangabad, Nashik and Nanded.

10The Economic Survey of Maharashtra 2013-14 (https://mahades.maharashtra.gov.in)

114 Chapter-3 Policy Environment for Housing and Housing Finance

l Shivshahi Punarvasan Prakalp Ltd. (SPPL): SPPL, a Company fully owned by Government of Maharashtra (GoM) was set up in 1998 with an objective of accelerating slum rehabilitation. Upto November, 2013, 111 buildings comprising of 10,673 tenements were constructed (of which 10,165 tenements have been allotted) incurring an expenditure of` 458 crore.

l Beedi Kamgar Gharkul Yojana: The State is implementing Beedi Kamgar Gharkul Yojana since July, 2001 for construction of houses at Solapur, Nashik, Pune, Kolhapur, Nanded, Garkheda in Aurangabad and Kamtee in Nagpur for Beedi workers. Under the Scheme, financial assistance of` 40,000 per house is provided by Government of India (GoI) and` 25,000 per house is provided by Government of Maharastra (GoM).An amount of` 42.07 crore has been distributed to the seven beedi workers organizations for construction of 19,847 houses. An amount of` 2 crore is budgeted for the scheme in the financial year 2013-14.

l Indira Awas Yojana: Indira Awas Yojana (IAY) is being implemented in the State since April, 1989 to construct the houses for houseless BPL families in the rural areas. It is a centrally sponsored scheme with Central and State share in the ratio 75:25. The GoI has fixed the cost of construction at` 70,000 per house fromApril 01, 2013. However, GoM has increased the total cost of each house to` 1,00,000 and provides the additional amount required to construct the house.Atarget of constructing 1,37,314 houses is fixed for the year 2013-14 for which GoI has sanctioned` 720.90 crore, while the State has made a provision of` 689.94 crore. Upto January, 2014 construction work of 54,666 houses has been completed incurring an expenditure of` 732.89 crore. During 2012-13 in all 1,45,764 houses were constructed incurring an expenditure of` 1,138.60 crore.

l Rajiv Gandhi Gramin Niwara Yojana-I: This Scheme is being implemented in the State for rural BPLfamilies. Under this Scheme, grant of` 68,500 is given to BPLbeneficiaries to construct their own houses. This Scheme is implemented through the District Rural Development Authority of 33 Zilla Parishads. An amount of` 93.21 crore was made available for construction of 13,607 houses in 2011-12 and` 380.24 crore for 55,428 houses in 2012-13.

l Revised Rajiv Gandhi Gramin Niwara Yojana-II: The State has decided to build 1,25,000 houses forAPL beneficiaries in low income category under Revised Rajiv Gandhi Gramin Niwara Yojana - II. The cost of each house is fixed at` 1,00,000 of which, a loan of `90,000 is provided through the apex bank in the district to the beneficiary and the remaining` 10,000 to be borne by the beneficiary. The interest component of the loan is borne by the GoM, as subsidy.

3.4.3 Madhya Pradesh 11

l Housing Policy, 2007: The Housing Policy of the State of Madhya Pradesh enunciated in 1995 was amended in 2007 due to change in demand for urban housing due to rapid urbanization. Considering growing need for urban housing, provision for participation of private and corporate sectors has been made in the policy to meet the requirement of social housing in the state. Provision of providing government land at concessional rates for development of habitations to construction agencies has also been made. The Policy encourages PPP to meet the shortages of houses. Provision has been made to grant

11The Department of Housing and Environment, Government of Madhya Pradesh (http://www.mphed.nic.in/)

115 Report on Trend and Progress of Housing in India 2014

permission for township development in agricultural areas scrapping the existing practice of compulsion for diversion of lands. The Policy retained an emphasis on resolving the housing problems of the economically weaker sections of society. The Policy stated that it would encourage private entrepreneurs in these sectors; since Government recognized the need to simplify and rationalize the rules and procedures that governed this sector.

l Mukhyamantri Awas Yojana: The Mukhyamantri Awas Yojana has been started in Madhya Pradesh with a view to providing dwellings to a large number of houseless families. Financial assistance to 33,739 families has been made available for constructing their own houses under the Scheme, which was launched in 2007. The Scheme has benefited those houseless people who do not come under the ambit of IndiraAwasYojana.

l CM Infrastructure development programme (District Plan): For the urban poor residents of slums, through PPP/new Scheme dwelling houses to be constructed in the various towns of the Madhya Pradesh, so that every urban poor can get a suitable house with better amenities.

l Integrated Housing and Slum Development Project (IHSDP): This Centrally Sponsored Scheme has been initiated by integrating the National Slum Development Programme and Valmiki Ambedkar Housing Scheme under sector reforms plan in December, 2005. Major objective of this Scheme is to provide the Urban Poor with adequate housing and infrastructural facilities in the slum areas. This Scheme is being implemented in the cities and towns other than those which are included in the JNNURM.

3.4.4 Gujarat12

l Mukhya Mantri GRUH (Gujarat Rural Urban Housing) Yojana: The State Government has launched the Mukhya Mantri GRUH (Gujarat Rural Urban Housing) Yojana from the year 2012 - 13, with the noble objective of making cities slum free. This Scheme also aims to provide affordable houses to people belonging to Economically Weaker Sections and Lower Income Groups. Under the Mukhya Mantri GRUH Yojana, the State Government has implemented Slum Rehabilitation Policy, 2013 based on Public Private Partnership (PPP) for rehabilitation of slum dwellers. Affordable Housing Policy has also been implemented to provide houses to people belonging to Lower or Middle Income Groups.

l Gujarat Slum Rehabilitation Policy - PPP - 2013: About seven lakh families reside in slums in the urban areas of Gujarat. Hence, the Policy has been framed by the State Government for in-situ rehabilitation of the slum dwellers families on public land by providing houses of minimum 25 sq. meters carpet area with basic civic amenities, free of cost through public private partnership. The slum dwellers' families that are living in slums on or before December 01, 2010 will be considered as beneficiaries. The Policy defines the roles and responsibilities of the Public Institutions and Private Developers and specifies the incentives provided to the private developers associated with the slum rehabilitation projects.

l Gujarat Affordable Housing Policy - 2014: Through this Policy the State Government aims to provide housing at reasonable price to poor urban families belonging to lower and middle income group, by involving both public institutions and private developers in such

12Urban Development and Urban Housing Department, Government of Gujarat (http://www.udd.gujarat.gov.in/)

116 Chapter-3 Policy Environment for Housing and Housing Finance

projects. The Objectives of the Policy are (1) To construct 50 lakh houses in next five years out of which 22 lakh houses are planned in urban area, and (2) To provide well planned houses having basic civic amenities at affordable prices to EWS, LIG and MIG beneficiaries.

3.4.5 Karnataka

The Department of Housing, Government of Karnataka has been implementing its own housing programmes and also effectively implementing Centrally Sponsored Schemes13 . Housing needs of low income, middle income and high income groups are also catered to by the Department, apart from housing for slum dwellers as a part of their rehabilitation and improvement of slum programmes. Three organisations under the Department of Housing catering to housing needs of the various sections of the society are:

l Rajiv Gandhi Rural Housing Corporation Limited (RGRHCL): The RGRHCL was established by the State Government in the year 2000 to implement all the State and Central Government sponsored housing schemes for economically weaker sections of the society both in rural and urban areas. The main objective of the Corporation is to provide affordable housing for persons belonging to EWS and LIG.

l Karnataka Housing Board (KHB): Established under Karnataka Housing Board Act, 1962 as a successor to Mysore Housing Board constituted in 1956. The primary objective of KHB is to make such schemes and to carry out such works as are necessary for the purpose of dealing with and satisfying the need of housing accommodation. With this directive, KHB endeavours to provide housing to the people of Karnataka at affordable cost and is therefore, recognized as the most important agency for housing throughout Karnataka.

l Karnataka Slum Development Board: Constituted during July, 1975 under the provisions of the Karnataka Slum Areas (Improvement Clearance) Act 1973. The main objective of the Board is to provide basic amenities to the slum dwellers and shelter to the needy in the slums.

Housing Programmes in the State of Karnataka14

In 2013-14, the State has allocated` 1,161.50 crore for the implementation of housing schemes, out of which an amount of`` 1,033.44 crore has been released and 947.75 crore has been spent up to October, 2013.

l RuralAshraya/BasavaVasathiYojane: This Scheme was introduced by the State Government in the year 1991-92 for providing the housing for rural houseless poor. The annual income of the beneficiary is limited to`` 11,800/-. Presently, it has been enhanced to 32,000. From 2013-14 the Government has fixed unit cost of`` 1.50 lakh, in which 1.20 lakh is subsidy from the State Government and remaining` 30,000/- is beneficiary contribution or bank loan. 50% of the target is reserved for SCs/STs and 50% is for general categories. Under this Scheme, the RGRHCL has constructed 2.76 lakh houses during the last 3 years. In 2013-14, the target is to complete 1.80 lakh houses including backlog, of which 90,342 houses have been constructed upto October, 2013.

l Ambedkar Housing scheme: This Scheme is implemented for rural houseless poor belonging to SC/STs. The annual income of the beneficiary is limited to` 32,000. The beneficiaries are selected by the Gram Panchayats through Gram Sabhas. The unit assistance per house has been enhanced

13http://housing.kar.nic.in/ 14Economic Survey of Karnataka 2013-14

117 Report on Trend and Progress of Housing in India 2014

from`` 40,000 to 63,500 from 2010-11 (` 50,000 as subsidy, ` 10,000 as bank loan and` 3,500 being beneficiary contribution).1.56 lakh houses have been constructed during 2000-01 to 2011- 12. In 2013-14, the target is to complete 5,000 houses of which 2,644 houses have been constructed upto October, 2013.

l IndiraAwasYojana: This Centrally Sponsored Scheme was introduced in 1989-90. This scheme is implemented for rural BPL houseless families. From 2013-14, the Government of India has enhanced the subsidy per house to` 70,000. Further, the State Government has enhanced the unit cost to`` 1.50 lakh. In this 52,500 is subsidy from Central Government and` 67,500 is subsidy from State Government and remaining` 30,000 is the beneficiary contribution or bank loan. The Scheme is being implemented by the RGRHCL. From 2004-05 to 2012-13, 6.37 lakh houses have been constructed upto October 2013. Upto October, 2013, 41,260 houses have been completed as against the target of 1,00,000 houses for 2013-14.

l Urban Ashraya Scheme: Urban Ashraya Scheme was introduced in 1991-92. It is a State- sponsored Scheme implemented for the urban poor. The annual income of the beneficiary should be`` 32,000. The unit cost under this scheme is 30,000 in which` 25,000 is a loan from Government for all the beneficiaries and` 5,000 is beneficiary contribution. The loan provided to the beneficiaries is recovered in 180 monthly installments. During the period 2000-01 to 2011-12, 1.49 lakh houses have been completed. In 2010-11, this scheme was renamed as Vajpayee Urban Housing Scheme. In 2013-14, the Government, has enhanced unit cost to` 2 lakh per house, in this ``1.20 lakh is subsidy from the State Government, 30,000 is compulsory beneficiary contribution and balance` 50,000 is the bank loan or beneficiary contribution. In 2013-14, the target is to complete15,000 houses against which 3,136 houses have been completed.

l Nanna Mane (Affordable Housing for Low-income Groups): In 2010-11, the State had introduced a new Scheme to benefit the people above poverty line by providing affordable houses to the low income group families like auto drivers, film industry workers, unorganized sector workers, beedi workers, street vendors, etc. The annual income of the beneficiary is limited to `1.00 lakh. Four projects had been taken up in 2011-12 in an around Bangalore viz., Talaguppa near Bidadi, Singanayakanahalli, Hunasamaranahalli and Kodathi under G+2 concept. The unit cost of the flat is`` 3.90 lakh, 4.25 lakh and ` 5.20 lakh respectively for different floors.

3.4.6 Odisha

The State Government in the Housing and Urban Development Department has been making concerted effort to tackle the problem of urban housing for the poor, lower and medium income groups. The various housing schemes in the state of Odisha are15 :

l Mo Kudia: The State Government has launched Mo Kudia Scheme from the year 2008-09. The rural households whose name does not find place in the BPL list but are otherwise genuinely poor may also be allotted a house in the joint name of spouse. Preference will be given to the following categories :-

l The poor women in distress, physically challenged, (over 40%), mentally challenged, victims of domestic violence, destitute widows, women headed households, adult orphans of Government registered institutions, victims of leprosy and AIDS will be eligible to get a house.

15The Housing & Urban Development Department, Government of Odisha (http://www.urbanodisha.gov.in/)

118 Chapter-3 Policy Environment for Housing and Housing Finance

l The poor victims of fire or flood can be considered.

l The tribal households whose houses are "fully collapsed" due to elephant menace can be considered.

l The primitive tribes groups (PTG) may be given priority without instating on title of land.

The list of beneficiaries shall be placed before Palli Sabha for information to avoid duplication and better targeting. Special provision has been made to cover the affected households whose house is damaged due to Fire, Flood, Riot and Elephant Menace. Out of the total target, 25% is kept reserved for the above people as Mo Kudia Special. This is allotted to the Districts over and above the normal Mo Kudia Target. The unit cost of Mo Kudia House in 18 IAPDistricts is` 75,000/- and 12 Non IAP Districts is` 70,000. State's achievement under Mo Kudia (Normal) during 2013-14 upto the end of March, 2014 is 18,668 as against a target of 38,998 houses, i.e. an achievement of 48 %. l Low Cost Housing Scheme under the National Welfare Fund for Fishermen (NWFF), sponsored by the Centre, envisages better living amenities for poor fishermen. Under this Scheme, model fishermen's villages are created and low cost housing and drinking water facilities are provided. Since its inception in 1987-88, funds have been allotted for construction of 2,332 houses and 1,989 units have been completed. Besides, two community halls have been completed and 32 tube wells have been installed. Under the Scheme, 1,500 low cost homes are targeted to be constructed during 2012-13. l Housing Schemes Under Backward Region Grant Fund (BRGF) is a Central Scheme launched in 20 (Twenty) Districts of Odisha viz: Balangir, Bargarh (included in 2012-13), Boudh, Deogarh, Dhenkanal, Gajapati, Ganjam, Jharsuguda, Kalahandi, Kandhamal, Keonjhar, Koraput, Malkangiri, Mayurbhanj, Nabarangpur, Nuapada, Rayagada, Sambalpur, Subarnapur and Sundargarh of the State. 3,921 Gram Panchayats (GPs), 217 Panchayat Samitis (PSs), 1 Municipal Corporation, 22 Municipalities and 50 Notified Area Councils (NACs) are covered under this Scheme. This has a holistic objective of making the Housing programme for Economically Weaker Section of people (EWS) more effective and to address the problem of regional imbalances. In respect of housing for poor people special stress has been given to the backward regions (Districts) of the state. During 2013-14, Government of India has again raised the annual entitlement of 20 BRGF Districts to` 417.01 crore under BRGF Development Grant.

119 Report on Trend and Progress of Housing in India 2014

Chapter 4 Role of National Housing Bank

4.1 Role of National Housing Bank

4.1.1 NHB was established in 1988, under the National Housing Bank Act, 1987, to operate as a principal agency to promote housing finance institutions and to provide financial and other support to such institutions. NHB is wholly owned by the Reserve Bank of India. One of the prime objectives of the Bank is to establish and promote a sound and stable housing finance system in the country. NHB is pursuing its charter and vision to shape and develop the housing finance market in India along sustainable lines and promoting financial and institutional depth in the housing finance sector. NHB is engaged in a range of activities that are key to the development of market based solutions for low and moderate income housing segments. Its activities include building of institutional framework and market infrastructure, which are critical for expansion and stabilization of the housing finance system. Apart from its various promotional activities, NHB also seeks to undertake measures that promote confidence amongstvarious stake holders. Under the provisions of theAct, NHB as the regulator for the Housing Finance Institutions (HFIs), seeks to promote sound and stable having finance system and its vision, mission and objectives are derived accordingly.

Vision

"Promoting inclusive expansion with stability in housing finance market."

Mission

"To harness and promote the market potentials to serve the housing needs of all segments of the population with focus on low and moderate income housing."

Objectives

4.1.2 NHB is a multifunctional Development Finance Institution (DFI) and performs a range of activities including financing, regulation and supervision, and promotional initiatives. NHB regulates and supervises the activities of housing finance companies in accordance with the provisions of the Act. This includes registration of housing finance companies for conduct of housing finance business, onsite and off-site supervision of housing finance companies, consumer interface and protection and coordination with other regulators. NHB, through its multifunctional, mutually synergistic and complementary roles, has broadened the scope and reach of the housing finance system by integrating it with the broader financial sector and capital market.

4.1.3 Since inception, NHB has been working to facilitate the supply of affordable housing for the "bottom of the pyramid" (BoP) and encourages broad-based home ownership through a right mix of policy initiatives. Housing finance system in India has evolved and steadily grown through various stages with NHB acting as a catalyst. NHB through its multi-functional role is engaged in building the market infrastructure for efficient functioning. NHB is strongly committed towards creating an appropriate environment for affordable housing and housing finance that can cater to

120 Chapter-4 Role of National Housing Bank

all segments of the population.At the same time, NHB continually seeks to contribute towards the development of sustainable habitat and towards the promotion and preservation of environment through energy efficiency and similar initiatives. In this regard, NHB continues to seek partnership with domestic and international agencies towards the promotion and implementation of such initiatives in the country. Through its various promotional and financing initiatives, NHB is pursuing its Vision of "Promoting Inclusive Expansion with Stability in the Housing Finance Market" and its Mission "To Harness and promote the market potentials to serve the housing needs of all segments of the population with focus on low and moderate income housing". NHB has sought to actualize its Vision through its focus on four broad areas of activities viz.

1. Financing 2. Promotion & Development of Market Infrastructure 3. Expanding the Scope of low and moderate income housing, and 4. Supervision of Housing Finance Companies

4.1.4 As a matter of conscious policy, NHB has judiciously combined its various roles viz. financing, regulation and promotion, for optimum impact on the expansion and stability of the mortgage market. NHB's programmes of financial assistance have focused on inclusive growth through market based solutions and approach. In formulation and delivery of such solutions, NHB's initiatives and policies have led the market towards greater efficiency and competition and wider choice of institutional products for people in all income segments.

4.1.5 In the backdrop of huge housing shortage among lower income segments, NHB has adopted a multi-pronged approach to tackle this problem. These include institution-building initiatives and measures for creating conducive environment for innovative practices in sync with market oriented approach.

4.1.6 Key aspects of NHB's business model for reaching lower income segments are:

1. As a development financial institution, NHB provides equity and concessional loan assistance to mortgage lenders for better home ownership among lower income households.

2. Initiatives on risk mitigation through mortgage credit guarantee institutions and funds, which improve affordability for the borrowers as also encourage the lenders to increase their exposure to these segments.

3. Capacity building through training programmes, standard as well as customized, for mortgage lending personnel at different levels.

4. Information dissemination aimed at better market functioning and transparency through advocacy and coordination with lending institutions.

121 Report on Trend and Progress of Housing in India 2014

4.2 Performance of National Housing Bank (July 01- June 30)

Picture 1: NHB's Financial Performance at a Glance

Table 5: Financial Highlights for the last six years (Amount in` crore)

Year ended 30th June 2009 2010 2011 2012 2013 2014 Capital 450 450 450 450 450 450 Reserves 1,792 2,072 2,352 2,739 3,190 3,631 Disbursements 10,889 8,160 12,035 14,454 17,635 17,890 Loans & Advances 16,851 19,837 22,581 28,519 34,603 39,932 Total Assets 19,927 22,732 25,781 31,332 38,721 45,050 Gross NPAs Nil Nil Nil 4 184 184 Net NPAs Nil Nil Nil 3 156 111 Profit After Tax 236 280 279 387 450 487 CRAR (%) 18 20 21 20 17 15 No. of Employees 89 89 87 95 91 107 PAT per Employee 2.62 3.15 3.21 4.07 4.84 4.55

Table 6: Income expenditure and profitability trend in the last four years (Amount in` crore)

Year ended 30th June 2011 2012 2013 2014 1. Total Income 1,948 2,488 3,024 3,520 2. Operating Expenses 1,518 1,889 2,262 2,620 3. Operating Profit (1– 2) 430 600 762 900 4. Provisions & Contingencies 31 56 98 114 5. Profit Before Tax (3– 4) 399 544 664 786 6. Provision for Tax 120 157 214 299 7. Profit After Tax (5– 6) 279 387 450 487

122 Chapter-4 Role of National Housing Bank

4.3 Resource Mobilization

4.3.1 NHB raised both short term and long term resources during the year. Short term resources included issuance of Commercial Papers (CPs) and short term loans from Banks. Long term borrowings includes issuance of Coupon Bonds, Rural Housing Fund (RHF), Deposits from Housing Finance Companies (HFCs) and Deposits from public under (SUNIDHI and SUVRIDDHI) term deposit schemes. The net incremental borrowing was` 17,084 crore for the year ended June 30, 2014. The total outstanding borrowing as on June 30, 2014 was` 39,460 crore.

Table7: Total Outstanding Borrowings as on June 30, 2014 (Amount in` crore)

Resource Amount Deposits from Public 268 Borrowings - CBLO 2,337 Urban Housing Fund (UHF) 1,000 Rural Housing Fund (RHF) 17,278 Foreign Borrowings 904 Borrowings from RBI 13 Term Loans 5,945 Loan Against Deposits 540 Bonds and Debentures 11,175 Total 39,460

Graph 4: Share of outstanding borrowings as on June 30, 2014

Deposits Borrowings from Public -CBLO 1% 6% UHF Bonds and 3% Debentures 28%

Loan Against Deposits 1% RHF 44% Term Loans 15% Borrowings from Foreign RBI Borrowings 0.03% 2%

123 Report on Trend and Progress of Housing in India 2014

4.3.2 Foreign Collaborations and Borrowings

4.3.2.1 NHB - World Bank Low Income Housing Programme: NHB has, in partnership with World Bank through Government of India, initiated a programme to encourage the flow of funds to the urban poor for their housing requirements. Under the programme NHB will be receiving a loan of SDR 66.1 million (equivalent to USD 100 million) over a period of five years from World Bank, which will be used to refinance the retail loans extended by the Primary Lending Institutions (PLIs), that conform to the criteria laid down under the programme. The Agreement was signed on August 14, 2013.

Following are the essential criteria prescribed under the Programme: l The loan size must be less than or equal to` 5 lakh. l Annual Income of the Household to be less than or equal to` 2 lakh l Loan to Valueratio to be less than or equal to 80% l The Dwelling Unit (DU) must be in urban area l No loan for plot purchase shall be eligible

The loans must meet the Social and Environment due diligence standard adopted under the programme. NHB has claimed $4.85 million under the programme in the first tranche and is in process of claiming $2.45 million under the second tranche.

4.3.2.2 NHB - DFID Affordable Housing Programme in Low Income States: NHB has entered into a partnership with DFID (Department for International Development) of UK vide agreement dated October 7, 2013 for supporting the cause of affordable housing in the low income states of the country. The programme will seek to address both supply side and demand side constraints to housing shortage in the country.

Under the demand side component, NHB shall provide for refinance to the eligible Housing Finance Companies (HFCs) in respect of their housing loans extended to the target segment. The households having an annual income of` 4 lakh or less will be covered under the programme. Housing loans to households deriving income from informal sources shall be thrust area under the programme.

The programme is intended for Low Income States of the country viz. Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh and West Bengal.

4.3.2.3 NHB - KfW - Promotional Programme for Energy Efficient New Residential Housing in India: This programme, the first of its kind in India, was undertaken in partnership with the KfW Development Bank of Germany. The agreement was signed between the organizations on December 31, 2010. A Line of Credit of €50 million was provided by KfW to NHB for extending refinance assistance to primary lending institutions in respect of their individual housing loans for energy efficient units.

For facilitating the calculation of potential energy savings by a household under the Programme, an assessment tool was specifically developed by Fraunhofer IBP, Germany and The Energy and Resources Institute (TERI), who were engaged as external experts. Based on the level of energy savings by way of adoption of various energy efficient

124 Chapter-4 Role of National Housing Bank

parameters (active and passive measures), certification was provided to the potential individual borrowers for use in the loan procurement process. The certification and accreditation for projects under the Programme was provided by Fraunhofer, IBP and TERI.

Logo and branding for the energy efficient units certified under the Programme has been unveiled, which shall help in providing further recognition to the Programme. A separate website for the programme www.ee-homes.com has been launched for disseminating information about energy efficiency in general and the Programme in particular. Several training programmes and seminars have been conducted for capacity building and awareness generation. The full amount of €50 million has now been utilized, providing refinance in respect of 2,065 dwelling units.

4.4 Refinance Operations

4.4.1 Refinance Sanctions and Disbursements

During the year 2013-14, refinance disbursements aggregated` 17,856.18 crore as against the sanctioned limits(including the carried forward limits) of` 31,548.09 crore.

Table8: Refinance Sanctions and Disbursements for the years 2012-13 and 2013-14 (Amount in` crore) Institution Sanctions Disbursements Category 2012-13 2013-14 2012-13 2013-14

HFCs 10,678.20 11,414.70 7,693.51 9,632.99 SCBs 21,354.60 19,552.70 9,459.33 7,942.72 Cooperatives 45.00 215.00 0.00 0.00 RRBs 652.08 365.69 388.80 280.47 Total 32,729.88 31,548.09 17,541.64 17,856.18

Graph 5: Refinance Sanctions for the years 2012-13 and 2013-14

35000 30000 25000 2012-13 ` 20000 2013-14 15000 10000

Amount in5000 Crore 0 HFCs SCBs Cooperatives RRBs Total

125 Report on Trend and Progress of Housing in India 2014

Graph 6: Refinance Disbursements for the years 2012-13 and 2013-14

20000

15000

` 2012-13 10000 2013-14

Amount in Crore 5000

0 HFCs SCBs Cooperatives RRBs Total

As can be inferred from the above table and graphs, in case of HFCs, sanctions and disbursements increased over the previous year, whereas for SCBs and RRBs there was a fall in the figures of sanctions and disbursements. In case of Cooperative Institutions, though there is increase in the sanctions in comparison to the previous year but like previous year there were no disbursement made to them in the current year as well.

The disbursements made in 2013-14, aggregating` 17,856.18 crore, represented the highest figure of refinance disbursements achieved during any one year, registering a marginal increase of approximately 2% over the previous year's refinance disbursements.

4.4.2 Cumulative Disbursements

The cumulative refinance disbursements as on June 30, 2014 were` 1,20,485 crore, with the maximum share with SCBs, followed by HFCs, Co-operatives and the RRBs, and the break-up is given below:

Table9: PLI- wise break-up of cumulative disbursements as on June 30, 2014

PLIs Amount in ` crore % of Total Housing Finance Companies 51,569 42.80 Scheduled Commercial Banks 64,968 53.92 Regional Rural Banks 1,423 1.18 Cooperatives 2,525 2.10 Total 120,485 100.00

Graph 7: PLI-wise break-up of cumulative disbursements as on June 30, 2014

1.18% 2.10% Housing Finance Companies

42.80% Scheduled Commercial Banks 53.92% Regional Rural Banks

Cooperative Sector

126 Chapter-4 Role of National Housing Bank

4.4.3 Trend on refinance disbursements between 1999 and 2014

Graph 8: Trend in NHB's refinance disbursements between 1999 and 2014

140000

120000

100000

Disb. 80000

60000

Cumm.

Amount in40000 Crore Disb.

20000

Table10: Trend in NHB's refinance disbursements between 1999 and 2014 (Amount in` Crore)

Year Disbursement Cumulative Disbursement 1999 -00 842 4,235 2000 -01 1,008 5,243 2001 -02 1,025 6,268 2002 -03 2,710 8,978 2003 -04 3,253 12,231 2004 -05 8,062 20,293 2005 -06 5,632 25,925 2006 -07 5,500 31,425 2007 -08 8,587 40,012 2008 -09 10,854 50,866 2009 -10 8,108 58,974 2010 -11 11,723 70,697 2011 -12 14,390 85,087 2012 -13 17,542 102,629 2013 -14 17,856 120,485

127 Report on Trend and Progress of Housing in India 2014

4.4.4 Tenure wise Breakup of Disbursements

Table11 : The tenure-wise breakup of disbursements during FY2012-13 and 2013-14

2012 -13 2013 -14 Tenure (years) Amount in % to Amount in % to ` crore Total ` crore Total Upto 1 year 0.00 0.00 448.33 2.51 More than 1 year and upto 3 years 5786.85 32.99 5444.00 30.49 More than 3 years and upto 5 years 2668.22 15.21 1445.19 8.09 More than 5 years and upto 7 years 3613.18 20.60 4408.94 24.69 More than 7 years and upto 10 years 4157.39 23.70 1754.39 9.83 Over 10 years 1316.00 7.50 4355.33 24.39 Total 17541.64 100.00 17856.18 100.00

Table 12: Disbursements made during 2013-14 and outstanding as on 30.06.2014, based on type of interest rate (Amount in` crore)

Disbursements Outstanding Type of Interest Rate during 2013 -14 % of Total as on % of Total 30.06.2014

Fixed Rate 12,956.37 72.56 28,413.01 72.04

Floating Rate 4,899.81 27.44 11,024.86 27.96 Total 17,856.18 100.00 39,437.87 100.00

Table 13: Breakup of refinance disbursements in 2013-14, based on size of underlying individual housing loans

Amount Individual Loan Size in ` crore % of Total

` Upto 2 lakh 1,455.33 8.15

More than`` 2 lakh and upto 5 lakh 2,004.93 11.23

More than`` 5 lakh and upto 10 lakh 2,712.37 15.19

More than`` 10 lakh and upto 15 lakh 6,188.34 34.66

More than`` 15 lakh and upto 25 lakh 2,249.51 12.60

2,930.70 Over` 25 lakh 16.41

Prospective 315.00 1.76

Total 17,856.18 100.00

128 Chapter-4 Role of National Housing Bank

As is evident the maximum refinance disbursements were in the loan-slab of`` 10 lakh to 15 lakh, and almost 82% of refinance disbursements went towards priority housing.

Table 14 : Area-wise trend in refinance disbursed against the individual housing loans between 2009 and 2014. (Amount in` crore)

Year Total Disbursements Rural Urban Amount % to Total Amount % to Total 2009 -10 8,107.76 3,695.82 45.58 4,411.94 54.42 2010 -11 11,722.79 5,785.58 49.35 5,937.21 50.65 2011 -12 14,389.91 5,607.54 38.97 8,782.37 61.03 2012 -13 17,541.64 7,717.60 44.00 9,824.04 56.00 2013 -14 17,856.18 7,689.97 43.07 10,166.21 56.93

Table 15: Scheme-wise trend in Disbursements under NHB's Refinance between 2011 and 2014 (Amount in` crore)

Name of the Refinance Scheme 2011 - 12 2012 - 13 2013 - 14 Regular Scheme 8,782.37 9,692.55 7,599.34 Rural Housing Fund (RHF) 3,003.03 4,027.42 3,527.31 (Housing + Solar) Golden Jubilee Scheme (GJRHRS) 2,604.51 3,690.18 4,162.66 Energy Efficient Housing (EEHRS) - 103.77 197.48 Low Income Housing Scheme (LIH) - 24.37 540.98 Solar Equipment Scheme - 3.35 - Refinance for Construction Finance (RCF) - - - Urban Housing Fund (UHF) - - 890.10 Refinance Scheme for Women (Women) - - 938.31 Total 14,389.91 17,541.64 17,856.18

Table 16: Trend in refinance disbursements made to different catagories of Primary lending Institutions between 2009 and 2014 (Amount in` crore)

Year HFCs SCBs UCBs RRBs Cooperatives Total

2009 -10 3,543.80 4,150.00 189.00 184.96 40.00 8107.76

2010 -11 3,308.67 8,112.00 168.00 134.12 0.00 11,722.79

2011 -12 5,302.13 8,851.42 93.32 143.04 0.00 14,389.91

2012 -13 7,693.51 9,459.33 0.00 388.80 0.00 17,541.64

2013 -14 9,632.99 7,942.72 0.00 280.47 0.00 17,856.18

129 Report on Trend and Progress of Housing in India 2014

Graph 9: Trend in refinance disbursements made to different categories of primary lending institutions between 2009 and 2014

12000

10000

HFCs 8000 SCBs ` 6000 UCBs

4000 RRBs Coop. Sector Amount in crore 2000

0 2009-10 2010-11 2011-12 2012-13 2013-14

As can be gauged from the Table and Graph in the last five years, Scheduled Commercial Banks have been constituting the biggest category of PLIs (Primary Lending Institutions) availing refinance from NHB (except for the current year i.e. 2013-14 when the HFCs constituted the biggest category). The possible reasons can be that the Banks, due to their size, branch network and captive customer base and knowledge of the retail finance segment, are able to act more aggressively as compared to other PLIs. In the HFC sector, barring a few large sized HFCs, most of the players are quite small and have limited regional presence, and are therefore not able to compete equally with banks on the outreach as well as cost. However, along with such constraints notwithstanding, HFCs have been performing well during the last few years, expanding their customer base and housing loans portfolio while keeping their NPAlevels under control, resultant of which they have surpassed the SCBs in terms of availing refinance from NHB in the year 2013-14.

The refinance assistance to the cooperatives has been negligible during the last few years. This is on account of declining levels of recovery and losses incurred by these institutions, which has made most of the cooperative institutions ineligible for availing refinance assistance from NHB. Further, the competition from Banks and HFCs has had its impact on the lending by ACHFS and ARDBs.

4.4.5 Energy Efficient Housing

NHB, in partnership with KfW, Germany, is promoting energy efficiency in the housing sector. In 2010-11, NHB has launched the Energy Efficient Housing Refinance Scheme, aimed at encouraging energy efficiency in the residential sector. The objective of the Scheme is to provide refinance assistance to PLIs including Banks, HFCs etc. in respect of their direct lending to individuals for purchase/construction of new energy efficient housing units in urban areas. Direct Housing loans sanctioned and disbursed after January 01, 2011 by the PLIs to individuals in urban areas having energy efficiency (EE) certificate recognized by NHB in consultation with KfW (based on Fraunhofer/TERI Toolkit), are eligible under the Scheme. The building projects which are designed in a way that fulfill the energy efficiency requirements are included under the promotional programme. The refinance assistance under the Scheme aims at improving the demand for energy efficient residential units. NHB has disbursed refinance amounting to` 430.21 crore against 2130 units under this Scheme.

130 Chapter-4 Role of National Housing Bank

Table 17: Trend in disbursements made by NHB under Energy Efficient Housing Refinance Scheme

Year Amount in ` Crore

2011 -12 128.96

2012 -13 103.77

2013 -14 197.48

Total 430.21

4.4.6 Rural Housing Fund

The Hon'ble Finance Minister, in the Union Budget speech for 2008-09, announced the setting up of the Rural Housing Fund (RHF) to enable primary lending institutions to access funds for extending housing finance to targeted groups in rural areas at competitive rates. The corpus of the fund for 2008-09 was`` 1,778.18 crore, which was enhanced to 2,000 crore each for 2009-10 and 2010-11,`` 3,000 crore for 2011-12, 4,000 crore for 2012-13 and further to ` 6,000 crore for 2013-14. So far, 1.23 million dwelling units were financed under this Fund.

Table 18 : Trend in allocation and utilization of RHF (Amount in` crore)

Utilization by different Institutions Year Allocation HFCs SCBs UCBs RRBs ACHFS & Total No. of ARDBs Units

2008 -09 1,778.18 1,544.88 0.00 15.00 201.60 0.00 1,761.48 95,577

2009 -10 2,000.00 1,794.86 0.00 4.00 184.96 32.00 2,015.82 70,995

2010 -11 2,000.00 1,687.54 182.00 0.00 134.12 0.00 2,003.66 42,859

2011 -12 3,000.00 2,125.25 721.42 13.32 143.04 0.00 3,003.03 1,26,795

2012 -13 4,000.00 1,939.94 1,802.03 0.00 285.45 0.00 4,027.42 3,56,480

2013 -14 6,000.00 2,409.80 1,023.39 0.00 94.12 0.00 3,527.31 5,35,299

Total 18,778.18 11,502.27 3,728.84 32.32 1,043.29 32.00 16,338.72 12,28,005

4.4.7 New Refinance Schemes Launched

NHB has launched the following two new schemes during the year 2013-14. l Refinance Scheme forWomen: In order to improve the flow of formal housing finance to women in urban areas, NHB has launched a Special Refinance Scheme for Women, whereby the retail lending institutions are encouraged to improve their housing finance to women borrowers. This Scheme will help in encouraging women to acquire residential property in their own name,

131 Report on Trend and Progress of Housing in India 2014

thereby enabling their empowerment. The Scheme envisages providing refinance assistance to PLIs at concessional rates in respect of their housing loans where the primary borrower is a woman and the property is solely or jointly owned by women. Refinance under the Scheme would be available at concessional interest rates upto of 100 bps below the NHB's Prime Lending Rate. The interest rate concession would be offered in a graded manner, with emphasis being placed on encouraging lower ticket size loans. The Scheme is being implemented through all eligible PLIs having pan India presence. During the year 2013-14, NHB has made disbursement of` 938.31 crore under the Scheme.

l Urban Housing Fund : In the Union Budget 2013-14, the Hon'ble Finance Minister has made the announcement regarding the establishment of an Urban Housing Fund (UHF), having the corpus of` 2,000 crore. Accordingly, NHB has formulated a new refinance Scheme for channelizing funds into the urban housing sector. The Scheme seeks to augment resources and improve credit availability and meet the housing needs of the people in lower income segments residing in urban areas. During the year 2013-14, NHB has made disbursement of` 890.10 crore under the Scheme.

Table19: Allocation and utilization of UHF (Amount in` crore)

Year Allocation Utilization by different Institutions

HFCs SCBs UCBs RRBs ACHFS & Total No. of ARDBs Units

2013 -14 2000.00 145.60 744.50 0.00 0.00 0.00 890.10 18310

Total 2000.00 145.60 744.50 0.00 0.00 0.00 890.10 18310

4.5 Sanctions and Disbursements through Direct Finance

NHB provides direct financial assistance for project lending to a range of borrowers in the public and public-private partnership, microfinance institutions, state level housing boards and area development authorities for integrated housing projects and slum redevelopment projects.

4.5.1 Project Finance and TechnologyPromotion

During the year 2013-14, NHB has sanctioned project finance assistance for one project amounting to`` 125 crore and disbursed 34.26 crore. The disbursements were made to public agencies and dairy cooperatives.

4.5.2 Housing Micro Finance Programme

NHB's Housing Micro Finance (HMF) programme started in 2004-05. Through housing microfinance, NHB has been providing long term financial support, technical assistance and training for housing finance for low income families. Under the programme, NHB has sanctioned `101.68 crore to 31 Microfinance Institutions spread across 11 states for financing 40,210 urban and rural housing/sanitation units. The beneficiaries include farmers, petty traders, artisans, dairy workers and other low income households. More than 90% of the beneficiaries are women.

4.5.3 Cumulative Performance (Excluding project refinance)

Till June 30, 2014, 445 projects were sanctioned with project costs of` 8,189.37 crore having loan components of` 5,121.92 crore to provide low income housing for the poor and has financed

132 Chapter-4 Role of National Housing Bank

various agencies, including Public Housing Agencies, MFIs, NGOs, and Public Private Partnership projects. Till June 30, 2014, NHB has disbursed` 2,233.54 crore as project finance.

Table20: Trend in Project Finance Disbursements made by NHB between 2002 and 2014 (Amount in` crore)

Year Sanctioned Disbursement No. of Category to which Amount Amount Houses Funding viz. MFI, Benefited PPP etc .

2002 -2003 84.46 73.06 Cumulatively Category of Funding 2003 -2004 83.80 44.49 NHB has includes: extended Housing Boards, 2004 -2005 197.82 27.16 financial Development assistance Authorities, Municipal for Corporations, State 2005 -2006 537.29 364.55 construction Housing Corporations, of houses Welfare Housing 2006 -2007 560.82 171.60 and housing Organizations, Micro related Finance Institutions, 2007 -2008 819.50 449.49 infrastructure Non-Governmental for around Organizations, Dairy 2008 -2009 248.30 35.41 1,25,000 Cooperatives and houses Public Private 2009 -2010 312.07 51.53 Partnership Companies 2010 -2011 78.80 311.78

2011 -2012 314.30 63.72

2012 -2013 154.26 92.89

2013 -2014 125.00 34.26

4.5.4 External Commercial Borrowings forAffordable Housing Projects

In terms of the RBI Circular A.P. (DIR Series) Circular No. 61 dated December 17, 2012, relating to the External Commercial Borrowings (ECB) policy, it has been decided to allow ECB for low cost affordable housing projects as a permissible end-use, under the approval route. ECB can be availed of by developers/builders for low cost affordable housing projects. As per the extant circular, "Builders/developers meeting the eligibility criteria shall have to apply to the NHB in the prescribed format. NHB shall act as the nodal agency for deciding a project's eligibility as a low cost affordable housing project, and on being satisfied, forward the application to the Reserve Bank of India for consideration under the approval route. In the year 2013-14, NHB has forwarded two proposals from Developers for USD 18 million to RBI under these guidelines.

4.6 Regulation and Supervision

The Bank regulates and supervises the Housing Finance Companies (HFCs) in public interest, as per provisions of the National Housing Bank Act, 1987. As on June 30, 2014, the total number of HFCs registered with NHB stood at 59, of which 18 HFCs have been provided the Certificate of Registration (CoR) with permission to accept public deposits and the balance 41 HFCs have been granted the CoR without permission to accept public deposits. Of the 18 HFCs, which have been provided the CoR with permission to accept public deposits, 6 are required to obtain prior written permission from the NHB before accepting any public deposits.

133 Report on Trend and Progress of Housing in India 2014

NHB's regulation and supervision is aimed at preventing the affairs of any HFC being conducted in a manner detrimental to the interest of the depositors and prejudicial to the public interest. As a part of regulations, NHB has also issued the Directions, Guidelines for the Asset Liability Management System in HFCs, KnowYourCustomer (KYC) andAnti Money Laundering (AML), Fair Practice Code, etc., and Circulars to the HFCs and their auditors, from time to time, in addition to the provisions contained in the Act. NHB also undertakes on-site inspection and off-site surveillance of HFCs through its supervisory mechanism to ensure safety and soundness of HFCs.

Further, to provide value to the stakeholders, a Complaint Redressal Cell has been set up to redress the grievances of the customers of HFCs. Recently, NHB has implemented Grievance Registration and Information Database System (GRIDS) to enable the customer of HFC to registercomplaints online and track the same. In order to contain frauds in housing finance, NHB, regularly disseminates the information on frauds relating to mortgages to HFCs through Caution Advices, and also interacts with other regulators for market feedback.

Box 5: Grievance Registration and Information Database System (GRIDS)

NHB has set up Complaint Cell to ensure prompt redressal of customer complaints and grievances against HFCs, and also uploaded the complete details on its Website (http://www.nhb.org.in/Regulation/Complaint_Cell) regarding role of the Complaint Cell for addressing the complaints received from customers of HFCs.

Dr. Gurdial Singh Sandhu, IAS, Secretary to Government of India, Ministry of Finance, Department of Financial Services launched the Grievance Registration & Information Database System (GRIDS) on July 1, 2014. GRIDS is now available to customers of HFCs for 24x7 on-line lodging of their grievances. GRIDS, developed by NHB, is a 24x7 on-line database system, which facilitates mainly the customer of HFC to lodge a complaint, and also track its status. GRIDS enables instant on-line updating of response to a complaint by HFC/NHB and also facilitates in viewing the latest status at any time by the Complainant/HFC/NHB from a centralized database. This would not only bring about transparency in Grievance Redressal Mechanism, but also reduce turnaround time of the disposal of complaints.

The Bank is also the member organization of Centralized Public Grievance Redress and Monitoring System (CPGRAMS) of Department of Administrative Reforms and Public Grievances (DARPG), which is aimed at providing the citizens, a platform for redressal of their grievances. The complaints received on the Portal related to NHB are being monitored on a regular basis and are promptly disposed off.

During the financial year 2013-14, a total of 668 complaints were received by the Bank and out of which 580 were closed, and the remaining have been under regular monitoring for their early disposal.

4.7 Promotion and Development

NHB participates in various Government Programmes/ Schemes as Nodal Agency, etc., and network with PLIs on their implementation.

134 Chapter-4 Role of National Housing Bank

4.7.1 Interest Subsidy Scheme for Housing the Urban Poor (ISHUP)

Till June 30, 2014, as nodal agency, NHB has disbursed NPV of subsidy amounting to` 8.67 crore covering 9,534 beneficiaries under the Scheme.

Table21: NPV subsidy disbursed by NHB between 2009 and 2014, under ISHUP ( Amount in` crore)

Year Total 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 NPV Subsidy disbursed 0.37 3.41 2.89 1.18 0.82 8.67

No. of Beneficiaries 531 4,611 2,987 755 650 9,534

4.7.2 1% Interest Subvention Scheme

NHB and RBI, as nodal agencies, disbursed the interest subvention to beneficiaries through banks and HFCs, and the details during the tenure of the Scheme are shown below:

Table 22: Disbursement of subsidy to PLIs, under 1% Interest Subvention Scheme between 2010 and 2013 (Amount in` crore)

1% Interest Subvention Scheme

Year Banks HFCs Total

2010 -11 21.22 17.32 38.54 2011 -12 170.14 129.86 300

2012 -13 318.29* 102.58* 420.87* * Includes disbursements made in FY 2013-14.

4.7.3 Rajiv RinnYojana

Under RRY, 7 MOUs have been signed by Primary lending Institutions (PLIs) with NHB, which is one of the nodal agency for implementation of the Scheme.

4.7.4 Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH)

In pursuance of the Budget announcements in FY 2010-11 and 2011-12, the Ministry of Housing and Urban Poverty Alleviation (MoHUPA), Government of India has set up and registered Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH) on May 01, 2012 and the same has also been notified by MoHUPA, GoI vide Gazette Notification dated July 7-13, 2012. The Trust has been set up with an objective to ensure better flow of institutional credit for housing in urban areas to cater to the needs of the targeted segments (EWS/LIG borrowers).

The Trust has an initial Corpus Fund of` 1 lakh contributed by the Settler. Further contribution will be made to the initial corpus by the Settler and the State Governments, who draw on it in accordance with slum population, i.e.`` 1,000 crore in the aggregate by the Settler and 200 crore

135 Report on Trend and Progress of Housing in India 2014

by the State Governments. As on date MoHUPA, GoI as settler, has contributed` 150 crore towards the corpus fund of the Trust.

CRGFTLIH provides guarantee for housing loan upto` 5 lakh sanctioned and disbursed by the lending institutions without any collateral security and/or third party guarantee to the new borrowers in the EWS/LIG categories in urban areas for home improvement/acquisition and purchase of new or second hand dwelling unit/construction/extension of an affordable dwelling unit with carpet area not exceeding 430 sq.ft.(40 sq.m.). The guarantee cover available under the scheme is to the extent of 90% of the sanctioned housing loan amount upto` 2 lakh and 85% for loan amounts above`` 2 lakh and upto 5 lakh. The lending institutions eligible to avail benefit of the Guarantee cover under the Scheme of the Fund Trust are Scheduled Commercial Banks, Regional Rural Banks, Urban Co-operative Banks, NBFC-MFIs, Apex Cooperative Housing Finance Societies registered under the State Co-operative Societies Act and Housing Finance Institutions registered with NHB.

Till June 30, 2014, 47 institutions have signed MoU with the Trust under the Scheme. During the period, the Trust has issued guarantee cover in respect of 116 loan accounts of 4 Member Lending Institutions (MLIs) involving a total loan amount of` 3.28 crore provided to EWS/LIG households. These MLIs are Canara Bank, Oriental Bank of Commerce, Syndicate Bank and GRUH Home Finance Ltd. The state wise and income group wise bifurcation of EWS/LIG loan accounts against which the Trust has issued the Guarantee cover to MLIs is shown in Table below.

Table 23: State-wise and Income group-wise bifurcation of EWS and LIG loan accounts against which the Trust has made the Guarantee cover to MLIs

Name of State Category of Borrowers Total No. of Sr. No. EWS LIG Borrowers Covered 1. Jharkhand 0 1 1 2. Telangana 1 0 1 3. Kerala 2 6 8 4. Pondicherry 1 0 1 5. Tamilnadu 0 2 2 6. West Bengal 0 1 1 7. Gujarat 1 47 48 8. Uttar Pradesh 2 2 4 9. Madhya Pradesh 1 7 8 10. Haryana 1 2 3 11. Karnataka 26 2 28 12. Rajasthan 0 3 3 13. Maharashtra 1 7 8 Total 36 80 116

4.7.5 Golden Jubilee Rural Housing Finance Scheme (GJRHFS)

GJRHFS has been conceptualized to address the problem of rural housing through improved access to housing credit, which would enable an individual to build a modest new house or make improvement or addition to his old dwelling in rural areas. The progress under the Scheme is monitored by NHB and is reported to the Government of India on quarterly basis. The performance of Banks and HFCs is a regular Agenda Item in the Meeting of the CEOs of HFCs, Banks and select RRBs conducted by NHB on a half yearly basis. Since its inception in 1997, it has been successful in its endeavor as vindicated by the fact that over 4.2 million units have been financed. The annual targets under the Scheme (in terms of number of units financed) are set by NHB and further NHB monitors its implementation. The targets under the Scheme have been increased in a phased manner from 50,000 units in 1997-1998 to 3, 75,000 units in 2011-2012 and

136 Chapter-4 Role of National Housing Bank

to 4,50,000 units in 2013-14. Cumulatively in the period 1997-2014, a total of 42,93,457 dwelling units were financed as against the target of 45,80,000 dwelling units, with an achievement of around 93.74 per cent of the target.

Table24: Trend in performance of GJRHFS, since inception

Year Target Achievement Achievement Disbursements (No. of Units) (No. of Units) against target (%) Amount in` crore 1997 -1998 50,000 51,272 102.54 N.A. 1998 -1999 1,00,000 1,25,731 125.73 N.A. 1999 -2000 1,25,000 1,41,363 113.09 N.A. 2000 -2001 1,50,000 1,58,426 105.62 N.A. 2001 -2002 1,75,000 1,87,268 107.01 3246.03 2002 -2003 2,25,000 1,78,200 79.20 3816.34 2003 -2004 2,50,000 2,43,753 97.50 6353.82 2004 -2005 2,50,000 2,58,562 103.42 6440.95 2005 -2006 2,75,000 2,98,651 108.60 8367.86 2006 -2007 3,30,000 2,98,426 90.43 7664.58 2007 -2008 3,50,000 2,71, 537 77.58 8844.81 2008 -2009 3,50,000 2,58,265 73.79 10337.88 2009 -2010 3,50,000 3,87,792 110.80 15,565.24 2010 -2011 3,75,000 2,93,721 78.33 14,781.18 2011 -2012 3,75,000 3,37,623 90.03 17,226.91 2012 -2013 4,00,000 4,18,896 104.72 24422.68 2013 -2014 4,50,000 3,83,971 85.32 18,867.88 Total 45,80,000 42,93,457 93.74

Graph 10: Trend in performance of GJRHFS, since inception

500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000

Number of Units 50,000 0

1997-19981998-19991999-20002000-20012001-20022002-20032003-20042004-20052005-20062006-20072007-20082008-20092009-20102010-20112011-20122012-20132013-2014

Target Acheivement

4.7.6 Reverse Mortgage Loan and Reverse Mortgage LoanAnnuity

NHB continues with its endeavors to promote the Reverse Mortgage Loan (RML) and Reverse Mortgage Loan Annuity (RMLA) by way of Counseling Programmes and Seminars for elderly citizens of the country to generate awareness amongst them for enabling them to take informed decision before availing the product. During 2013-14, NHB organized and conducted 5 Seminars, besides participation in 1 Workshop for the senior citizens in various cities of India.

137 Report on Trend and Progress of Housing in India 2014

Till date, NHB has fifteen RMLCounseling centers, out of which two were opened during the year 2013-14. These counseling centers are at Ahmedabad, Bengaluru, Bhopal, Bhubaneswar, Chandigarh, Chennai, Delhi (2), Hyderabad, Kolkata, Lucknow, Mumbai, Nagpur, Pune and Patna. These centers are being run by NHB in association with eminent Non-Government Organizations (NGO's) working for the elderly. NHB has also been working towards building the capacities in the commercial banks and HFCs for implementing the product by way of its training programmes and seminars for the personnel of these institutions.

NHB has been carrying on with its advocacy on the various issues concerning implementation of the RML/RMLA. Significant among them was the issue relating to tax exemption of the payment received under RMLA by the senior citizen borrowers. The Government of India have vide Notification No.79/2013/F.No.149/54/ 2013-TPL dated October 07, 2013, amended the Reverse Mortgage Scheme, 2008 to include RMLAin the Reverse Mortgage (Amendment) Scheme, 2013, eligible for tax exemption.

4.8 Capacity Building

NHB regularly undertakes various measures towards training and capacity building of various stakeholders in the sector. This includes regular interaction with various PLIs in forums like the CEOs' meetings, Round Table discussions, etc., apart from imparting and conducting various training programmes.

NHB organized 25 programmes during 2013-14 for officers of Housing Finance Companies and Banks, Regional Rural Banks and Urban Cooperative Banks, which is the highest in any calendar year since inception.Atotal of 797 participants from various PLIs participated in NHB's programmes. The Training Programmes organized were spread throughout the the country viz. Ahmedabad, Aizwal, Akola, Bengaluru, Bhubaneswar, Chennai, Gurgaon, Guwahati, Hyderabad (2 programmes), Indore, Kadpa, Lucknow, Madurai, Mumbai (2 programmes), Mysore, Nagpur, Neharlagun, Nellore, Puducherry, Raipur, Shillong, Udaipur and Warangal.

A dedicated programme for Women Executives was also held at Mumbai on 'Mortgage Finance for Homes'. NHB is also conducting Training Programmes for RRBs and UCBs. To have maximum impact, the programme is customized for the participants of specific RRB, based on its requirment. This also helps in focussing the discussions on specific areas. The initiative highlights NHB's commitment towards capacity bulding in housing finance sector. The programmes for RRBs/UCBs in Hindi speaking areas were conducted in Hindi. The feedback received from the participants has been very good and encouraging.

138 Chapter-4 Role of National Housing Bank

Table25: Trainings conducted by NHB in 2013-14

S.No. Program Details Location Date No. of Participants 1. Orientation in Housing Finance Bengaluru July 11 -12, 2013 35

2. Rural Housing Finance Guwahati July 25 -26, 2013 31

3. Rural Housing Finance Warangal August 5-6, 2013 32

4. Rural Housing Finance Hyderabad August 7-8, 2013 42

5. Retail Assets -NPA Management & Hyderabad August 19-20, 23 Recoveries 2013 6. Rural Housing Finance Indore August 26 -27, 41 2013 7. Mortgage Finance for Homes (for Women Mumbai September 26 -27, 29 Executives) 2013 8. Rural Housing Finance Akola October 7 -8, 35 2013 9. Housing Finance for UCBs Nagpur October 9, 2013 20 10. Rural Housing Finance Udaipur October 24 - 25, 29 2013 11. Documentation for Housing Loans Chennai November 11 - 12, 42 2013 12. Rural Housing Finance Gurgaon November 19 -20, 28 2013 13. Legal Issues in Housing Finance Puducherry December 28 - 29, 38 2013 14. Rural Housing Finance Pandyan Grama Bank Madurai January 06 - 07, 31 2014 15. Prevention of Fraudulent Practices in Shillong January 30 - 31, 38 Housing Finance 2014 16. Rural Housing Finance Chhattisgarh Rajya Raipur February 06 -07, 25 Gramin Bank 2014 17. RHF Odisha Gramya Bank Bhubaneswar February 20 - 21, 24 2014 18. Risk Management & Asset Liability Ahmedabad February 27- 28, 31 Management 2014 19. RHF Andhra Pragathi Grameen Bank Kadapa April 10-11, 2014 35

20. RHF Andhra Pragathi Grameen Bank Nellore April 21-22, 2014 39

21. Regulatory Frame work for HFCs Lucknow May 08-10, 2014 38

22. RHF Mizoram Rural Bank Aizawl May 19-20, 2014 21

23. RHF Arunachal Rural Bank Neharlagun May 23-24, 2014 23

24. KYC - FPC and Customer Service Mysore June 5- 6, 2014 35

25. Housing Finance for UCBs Mumbai June 20, 2014 32

Total Participants 797

139 Report on Trend and Progress of Housing in India 2014

Chapter 5 Operations and Performance of Housing Finance Institutions

Housing Finance Companies (HFCs), specialized lending institutions for housing, registered with NHB were one of the major players in the mortgage market in India. As on March 31, 2014, there were 58 HFCs registered under Section 29A of the National Housing Bank Act, 1987. They had a network of 2,510 branches and other offices spread across the country. In addition, few HFCs had their representative offices for liaison work, in abroad.

The growth in outstanding housing loan portfolio of HFCs was encouraging, with an annual increase of 20 per cent during the year 2013-14. The HFCs' market share was approximately 35 per cent of the retail housing finance market. The Directions/Policies Circulars/ Guidelines issued by NHB for the HFCs on issues pertaining to requirements of Net Owned Fund, Capital Adequacy Ratio, Loan to Value Ratio, Assignment of Risk weights and Provisioning, Know Your Customer andAnti Money Laundering, etc., have been intended to ensure sound growth of HFCs and development of housing finance sector on sustainable lines. Some of the key highlights of HFCs would include the following- l Number of registered HFCs was increased from 56 as on 31-03-2013 to 58 as on 31-03-2014. l Number of branches/offices of registered HFCs was increased from 2,063 as on 31-03-2013 to ` 2,510 as on 31-03-2014. l Total outstanding loan portfolio as on 31-03-2014 was` 463,942 crore, with an annual growth of 18.89%. l Total outstanding housing loan portfolio as on 31-03-2014 was` 347,858 crore, with an annual growth of 19.77%. l Total outstanding non-housing loan portfolio as on 31-03-2014 was` 116,084 crore, with an annual growth of 16.33%. l Share of outstanding housing loans to outstanding total loans was increased to 74.98% as on 31-03-2014 from 74.43% as on 31-03-2013. l Share of outstanding non-housing loans to outstanding total loans was marginally decreased to 25.02% as on 31-03-2014 from 25.57% as on 31-03-2013. l TotalNNPAsas on 31-03-2014 were` 2,524 crore with an increase of 43.90% over previous year (` 1,754 crore as on 31-03-2013). l Total Net Owned Funds as on 31-03-2014 were increased by 1.49%, i.e. from` 51,027 crore as on 31-03-2013 to` 51,785 crore as on 31-03-2014. l Outstanding Borrowings of HFCs as on 31-03-2014 were` 421,559 crore, with an annual growth of 19.04%. l Outstanding Public Deposits as on 31-03-2014 were` 51,981 crore, with an annual growth of 17.66%.

140 Chapter-5 Operations and Performance of Housing Finance Institutions

5.1 Number of Housing Finance Companies

5.1.1 As on 31-03-2014, 58 HFCs were granted the Certificate of Registration (CoR) under Section 29A of the National Housing Bank Act, 1987. Of these, 40 HFCs were given the CoR without permission to accept public deposits. Out of 58 HFCs, 50 were public limited companies and 8 were private limited companies. In 2013-14, Certificates of Registration have been granted to companies namely Capital First Home Finance Private Limited and Viva Home Finance Limited.

Graph11: Classification of Registered Housing Finance Companies

Public Limited Companies Private Limited Companies 60

0 31-03-2012 31-03-2013 31-03-2014

5.1.2 Branches/ Offices Network of the HFCs

HFCs branches/offices were increased from 2,063 as on 31-03-2013 to 2,510 as on 31-03-2014, with an annual growth of about 22%.

Graph 12: State/ Union Territory-wiseBranches/Offices of Registered HFCs

450 400 350 300 250 200 150 100 50 0

31-03-2013 31-03-2014

141 Report on Trend and Progress of Housing in India 2014

5.2 Financial Profile of HFCs

5.2.1 Financial year for the HFCs registered with NHB is from April 01 to March 31, and the data provided under this Chapter was as on March 31, 2014.

Table26: Trend in Key Financial Indicators of HFCs for the last three years (Amount in` crore)

Particulars 2012 2013 Growth 2014 Growth % %

Paid up Capital 5,403 5,541 2.55 6,014 8.54

Free Reserves 34,658 48,019 38.55 55,179 14.91

Net Owned Fund (NOF) 37,103 51,027 37.53 51,785 1.49

Public Deposits 35,476 44,179 24.53 51,981 17.66 Outstanding Housing Loans 2,22,225 2,90,427 30.69 3,47,858 19.77

Outstanding Total Loans 3,01,681 3,90,217 29.35 4,63,942 18.89

GNPA as Percentage of O/s Total 1.23 1.11 - 1.14 - Loans

NNPA as Percentage of O/s Total 0.48 0.45 - 0.59 - Loans

5.2.2 The total Net Owned Fund (NOF) of HFCs as at the end of March, 2013 were` 51, 027 crore, which increased to` 51,785 crore as at the end of March, 2014, thereby shown a growth of 1.49 per cent from the preceding year. Public Deposits of HFCs grew by 18%, that is, from` 44,179 crore at the end of March, 2013 to` 51,981 crore at the end of March, 2014. Trend analysis on outstanding resources data of HFCs revealed that HFCs raised about one third of resources from banks through borrowings and subscription to debentures, and the debentures subscribed by others constituted around one fourth. Although NHB's refinance support constituted around 4% of HFCs outstanding resources, but played a crucial role in containing HFCs' cost of borrowings.

Graph 13: Trend in Outstanding Resources of HFCs for the last three years

Net Owned Fund

Public Deposits

Borrowings from NHB

Borrowings from Banks

Foreign Borrowings

Other Borrowings

Debentures subscribed by Banks

Debentures subscribed by Others

142 Chapter-5 Operations and Performance of Housing Finance Institutions

5.2.3 Housing loan outstanding with HFCs as at the end of March, 2013 were` 290,427 crore, and it was increased to` 347,858 crore as at the end of March, 2014, thereby shown a growth of about 20 per cent as on March 31, 2014. Share of loan of HFCs was the highest amongst all loan assets of HFCs in three years i.e. 68,70 and 70 percent, respectively. The investment percentage to total assets were the least in HFCs asset.Aggregate investments of HFCs stood at` 34,228 crore as on March 31, 2014 as against` 27,176 crore as on March 31, 2013, thereby registering an increase of 25.95 per cent.

Graph 14: Trend in OutstandingAssets of HFCs for the last three years

Housing Loans

Investments

Other Loans & Advances

5.3 Key Performance Indicators of HFC

5.3.1 Key financial parameters of Public and Private Ltd. shown that Public Limited HFCs were the dominant player in the market.

Table27: Trend in Performance of Public and Private Ltd. HFCs for the last three years (Amount in` crore)

Particulars 2011 &12 2012 &13 2013 &14 Public Private Total Public Private Total Public Private Total Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Paid up 5,239 164 5,403 5,367 174 5,541 5,879 135 6,014 Capital Free Reserves 34,620 38 34,658 47,911 108 48,019 55,021 158 55,179

Net Owned 36,912 191 37,103 50,760 267 51,027 51,502 283 51,785 Fund (NOF) Public 35,476 --- 35,476 44,179 --- 44,179 51,981 --- 51,981 Deposits Outstanding 2,22,082 143 2,22,225 2,90,001 426 2,90,427 347,376 482 3,47,858 Housing Loans

143 Report on Trend and Progress of Housing in India 2014

5.3.2 On the basis of Public Deposit accepting and non-accepting: As on March 31, 2014, 18 HFCs had the Certificate of Registration with permission to accept public deposits. The key financial parameters of HFCs for the past three years were provided in the following table on the basis of classification into public deposit accepting and non-public deposit accepting HFCs.

Table 28: Trend in Performance of Public Deposit accepting HFCs with Non-accepting HFCs for the last three years (Amount in` crore) Particulars As on 31-03-2012 As on 31-03-2013 As on 31-03-2014

Total Total

Deposit Total Deposit Deposit

- - -

HFCs HFCs HFCs HFCs HFCs

Deposit Deposit

accepting accepting accepting accepting accepting

HFCs

Deposit

accepting

Non Non Non Paid up 4,324 1,079 5,403 4,072 1,469 5,541 4,138 1,876 6,014 Capital Free 33,075 1,583 34,658 42,192 5,827 48,019 48,239 6,940 55,179 Reserves Net Owned 34,545 2,558 37,103 44,056 6,971 51,027 43,772 8,013 51,785 Fund (NOF) Public 35,476 --- 35,476 44,179 --- 44,179 44,179 --- 51,981 Deposits Outstanding 2,10,640 11,585 2,22,225 2,62,821 27,606 2,90,427 3,11,111 36,747 3,47,858 Housing Loans 5.3.3 Commercial Banks and Multi-State Co-operative Bank Sponsored HFCs: As on March 31, 2014, there were five HFCs sponsored by Commercial Banks and one HFC sponsored by a multi- state co-operative Bank, the details of which are given below :

l Can Fin Homes Ltd., sponsored by Canara Bank l Cent Bank Home Finance Ltd., sponsored by Central Bank of India l ICICI Home Finance Company Ltd., sponsored by ICICI Bank Ltd. l Ind Bank Housing Ltd., sponsored by Indian Bank l PNB Housing Finance Ltd., sponsored by Punjab National Bank l REPCO Home Finance Ltd., sponsored by REPCO Bank, which is a multi-state co-operative Bank.

Key financial parameters of HFCs classified on the basis of Commercial Banks and Multi- State Co-operative Banks sponsored HFCs, and Other HFCs shows the dominant position of other HFCs, compared to sponsored HFCs.

Table29: Trend in Performance of Sponsored HFCs with other HFCs for the last three years ( Amount in` crore)

Particulars As on 31-03-2012 As on 31-03-2013 As on 31-03-2014 Sponsored Other Total Sponsored Other Total Sponsored Other Total HFCs HFCs HFCs HFCs HFCs HFCs Paid up 1,226 4,177 5,403 1,262 4,279 5,541 1,282 4,732 6,014 Capital Free 1,311 33,347 34,658 1,931 46,088 48,019 2,465 52,714 55,179 Reserves Net Owned 2,331 34,772 37,103 3,005 48,022 51,027 3,536 48,249 51,785 Fund (NOF) Public 1,248 34,228 35,476 1,718 42,461 44,179 2,296 49,685 51,981 Deposits Outstanding 12,318 2,09,907 2,22,225 15,860 2,74,567 2,90,427 20,854 3,27,004 3,47,858 Housing Loans

144 Chapter-5 Operations and Performance of Housing Finance Institutions

5.4 Borrowing Profile of HFCs

Paid- up capital of the HFCs (including the preference share capital which is compulsorily convertible into equity) was increased from`` 5,541 crore as on 31-03-2013 to 6,014 crore as on 31-03-2014, i.e. growth of 8.54 per cent per annum. However, there was an increase of only 1.54 per cent per annum in the Net Owned Funds of the HFCs i.e. from`` 51,028 crore as on 31-03-2013 to 51,785 crore as on 31-03- 2014. HFCs dependency was observed on loans from banks and financial institutions and debentures, besides their owned funds. Borrowings through bonds and debentures, inter-corporate deposits (ICDs), commercial papers, sub-ordinate debts and public deposits were other sources of funds for HFCs.

Table30: Trend in Composition of Borrowings of HFCs for the last three years (Amount in` crore)

Particulars 2011 -12 2012 -13 2013 -14 As on As on Growth over As on Growth over 31-03-2012 31-03-2013 pervious 31-03-2014 pervious year year National Housing Bank 10,641 15,863 49% 19,376 22% Foreign Government, Foreign 1,801 1,059 -41% 3,314 213% Authority and Foreign Citizen or Person Banks 100,663 104,236 4% 128,407 23% Debentures secured by mortgage of 96,032 141,257 47% 169,015 20% immovable properties or convertible debentures i. Of the above, 22,821 35,526 56% 40,795 15% ii. debentures subscribed by banks iii. debentures subscribed by 73,210 105,731 44% 128,220 21% others iv. Others 32,183 47,553 48% 49,466 4% v. Public Deposits 35,476 44,179 25% 51,981 18%

The outstanding borrowings of HFCs excluding public deposits were increased by 19.23 per cent, i.e. from`` 309,967 crore as on 31-03-2013 to 369,578 crore as on 31-03-2014. Borrowings from the banking system stood at` 128,407 crore as on 31-03-2014 as against` 104,236 crore as on 31-03-2013. Other borrowings were increased from 205,731 crore as on 31-03-2013 to` 241,171 crore as on 31-03- 2014, thereby registering a growth of 17.23 per cent. The outstanding public deposits with the HFCs registered an increase of 17.66 per cent i.e. from`` 44,179 crore as on 31-03-2013 to 51,981 crore as on 31-03-2014.

5.5 Public Deposits with HFCs

Outstanding public deposits with HFCs showed an increasing trend during the year 2013-14. As on 31- 03-2014, public deposits over` 1,00,000 accounted for maximum with a share of 85.48 per cent of the total public deposits. The trend in size-wise outstanding public deposits at the end of last three years is shown in the Chart below. It was observed that major HFCs viz. Housing Development Finance Corporation Ltd., Housing & Urban Development Corporation Ltd., Dewan Housing Finance Corporation Ltd., PNB Housing Finance Ltd., Gruh Finance Ltd, Sundaram BNP Paribas Home Finance Ltd., LIC Housing Finance Ltd., etc. mobilized significant amount of public deposits during the year 2013-14.

145 Report on Trend and Progress of Housing in India 2014

Graph 15 : Trend in Size-wise Public Deposits of HFCs for the last three years

Upto Rs. 5000 Rs. 5,001 to Rs. 10,000 Rs. 10,001 to Rs. 25,000 Rs. 25,001 to Rs. 50,000 Rs. 50,001 to Rs. 100,000 Over Rs. 100,000

(Amount in crore)

5.5.1 Interest rate-wise Public Deposits of HFCs:

As on 31-03-2014, 84.44 per cent of the total public deposits held by the HFCs were in the interest rate slab of 9 to 11 per cent per annum. HFCs had 10.42 per cent of public deposits in the interest rate slab of 6 to 9 per cent per annum, which showed the decline over previous year. The slab of interest rate of 13 per cent and above had the least share of public deposits during the last three years.

Graph 16: Trend in Interest rate-wise Public Deposits of HFCs for the last three years

Free of interest Below 6% 6% or more but less than 9% 9% or more but less than 11%

` 11% or more but less than 12.5% At 12.5%

(Amount in crore) More than 12.5% but less than 14% More than 14%

5.5.2 Maturity-wise Public Deposits of HFCs:

Analysis of maturity-wise classification of public deposits in the last three years shows that the majority of the public depositors' preference was between 24 months and 48 months. However, the share of public deposits in this category has shown a decreasing trend as on March 31, 2014.

146 Chapter-5 Operations and Performance of Housing Finance Institutions

Graph 17 : Trend in Maturity-wise Public Deposits of HFCs for the last three years

More than 84 months

84 months

More than 60 months but less than 84 months 60 months

` 48 months or more but less than 60 months 24 months or more but less than 48 months

(Amount in crore) 12 months or more but less than 24 months Less than 12 months

Repayable on demand or on notice

5.6 Asset Profile of HFCs

Asset profile of HFCs mainly comprises of housing loans, other loans and investments, and the outstanding amount at the end of March 31, 2014 was` 4,98,170 crore. In 2013-14, housing loans contributed around 70 per cent of the total assets portfolio of HFCs, with an annual growth of about 19% as on March 31, 2014. Other Loans and Advances comes next to housing loans in HFCs assets profile with a share of about 23%, and the investments share was on a increasing trend, and had only about 7% of the total assets of HFCs in 2013-14.

5.6.1 Outstanding Loans andAdvances, and Investments of HFCs

Table 31: Trend in Outstanding Loans & Advances, and Investments of HFCs for the last three years (Amount in` crore)

Particulars/As on 31March 2012 2013 Growth % 2014 Growth %

Housing Loans 2,22,225 2,90,427 30.69 3,47,858 19.77

Other Loans & Advances 79,456 99,790 25.59 1,16,084 16.33

Investments 26,397 27,176 2.95 34,228 25.95

Total 3,28,078 4,17,393 27.22 4,98,170 19.35

HFCs' other loans and advances outstanding stood at` 116,084 crore as on 31-03-2014, as compared to` 99,790 crore as on 31-03-2013, with a growth rate of 16.33 per cent per annum. The outstanding ratio between housing loans and other loans & advances was 3:1.

Aggregate investments of HFCs stood at`` 34,228 crore as on 31-03-2014, compared to 27,176 crore as on 31-03-2013, with an increase of 25.95 per cent per annum.

147 Report on Trend and Progress of Housing in India 2014

5.6.2 Housing Loans of HFCs

Outstanding housing loans of all registered HFCs was` 347,858 crore as on 31-03-2014, and saw a growth of 20 per cent per annum, compared to` 290,427 crore as on 31-03-2013. The percentage of outstanding housing loans to total loans was at 73.66% per cent and 74.43 per cent as on March 31, 2012 and March 31, 2013 respectively, which marginally increased and maintained at 74.98 per cent, as on March 31, 2014

Table32: Comparison of Housing Loans with TotalLoans of HFCs as on March 31 (Amount in` crore)

Particulars/As on March 31 2012 2013 Growth % 2014 Growth %

Outstanding Housing Loans 2,22,225 2,90,427 30.69 3,47,858 19.77

Outstanding Total Loans 3,01,681 3,90,218 25.59 4,63,942 18.89

Housing Loans to Total Loans 73.66% 74.43% -- 74.98% --

5.6.3 Maturity pattern of Housing Loans of HFCs

Analyzing the trend on the maturity pattern of housing loans outstanding to Individuals with HFCs, it was observed that around 97% of these housing loans were had the maturity of above 7 years. This indicates that the preference of majority of HFCs individual housing loan customers' was for housing loan of a long tenure, rather than short or medium tenure.

Graph 18: Trend in Maturity-pattern of Outstanding Housing Loans to Individuals by HFCs

300000.00 250000.00

` 200000.00 150000.00 100000.00

(Amount in crore) 50000.00 0.00 Up to 1 year 1 to 3 years > 3 to 5 years > 5 to 7 years Above 7 years

Individual Housing Loan Tenor

5.7 Disbursements of Housing Loans by HFCs, based on type of Borrowers

The disbursements on housing loans by HFCs had a growth rate of about 21% in 2013-14 over 2012-13. Borrowers' type-wise dissection of disbursement of housing loans in 2013-14, further revealed that around 78% of their housing loans were to individuals, 16% to builders and 6% to corporate bodies and others. This indicates that HFCs main service concentration of housing loan was individuals.

148 Chapter-5 Operations and Performance of Housing Finance Institutions

Graph 19: Trend in Disbursements of Housing Loans by HFCs for the last three years, based on Category of the Borrowers. (Amount in` crore)

Housing Loans to Individuals

Housing Loans to Builders

Housing Loans to Corporate Bodies and Others

5.7.1 Trend in disbursements of housing loans to individuals by HFCs for the last three years, based on purpose of utilization.

Analysis of purpose-wise HFCs disbursements of housing loans given to individuals revealed that about 74% of the loans disbursed were for acquisition/ construction of new houses, 2% for upgradation including major repairs, and the balance 24% for old/existing houses (resale). This showed that new assets creation were the main activity of the borrowers from the housing loans disbursed by HFCs.

Graph 20: Trend in Disbursements of Housing Loans to Individuals by HFCs for the last three years, based on purpose of utilization.

Category-wise Disbursement Trend on Housing Loans by HFCs

80000 Upto Rs. 2 lakh >Rs. 2 lakh and upto Rs. 5 lakh 70000 >Rs. 5 lakh and upto Rs. 10 lakh >Rs. 10 lakh and upto Rs. 15 lakh 60000 >Rs. 15 lakh and upto Rs. 25 lakh >Rs. 25 lakh 50000

40000

30000

Amount in crore 20000

10000

0 New Houses Upgradation Existing Houses New Houses Upgradation Existing Houses New Houses Upgradation Existing Houses 2011-2012 2012-2013 2013-2014

149 Report on Trend and Progress of Housing in India 2014

In 2013-14, HFCs disbursed` 1,04,057 crore to 11,02,712 loan accounts for acquisition/ construction of new houses, up-gradation (including major repairs), and purchase of old/existing houses (resale). The segregated and consolidated details are captured in the tables .

Table 33: Trend in Disbursements of Housing Loans of HFCs to individuals for the last three yearsAcquisition/Construction of New Houses (Amount in` crore)

Particulars 2011-12 2012-13 Growth % 2013-14 Growth % Upto ` 2,00,000 248 369 48.79 566 53.39 Above ` 2,00,000 and upto ` 500,000 1,211 1,267 4.62 1,385 9.31 Above ` 5,00,000 and upto ` 10,00,000 7,046 9,800 39.09 7,199 -26.54 Above ` 10,00,000 and upto ` 15,00,000 6,681 8,196 22.68 13,240 61.54 Above ` 15,00,000 and upto ` 25,00,000 12,509 16,148 29.09 17,031 5.47 Above ` 25,00,000 20,971 31,291 49.21 37,281 19.14 Total (1) 48,666 67,072 37.82 76,702 14.36

Table 34: Trend in Disbursements of Housing Loans by HFCs to Individuals for the last three years Upgradation (including major repairs) (Amount in` crore)

Particulars 2011-12 2012-13 Growth % 2013-14 Growth %

Upto `2,00,000 96 114 18.75 57 -50.00

Above ` 2,00,000 and upto ` 500,000 443 449 1.35 490 9.13

Above ` 5,00,000 and upto ` 10,00,000 694 872 25.65 919 5.39

Above ` 10,00,000 and upto ` 15,00,000 294 366 24.49 467 27.60

Above ` 15,00,000 and upto ` 25,00,000 179 248 38.55 317 27.82

Above ` 25,00,000 89 136 52.81 152 11.76

Total (2) 1,795 2,185 21.73 2,402 9.93

Table 35: Trend in Disbursements of Housing Loans by HFCs to Individuals for the last three yearsAcquisition of Old/Existing Houses (Resale) (Amount in` crore)

Particulars 2011-12 2012-13 Growth % 2013-14 Growth %

Upto `2,00,000 18 21 16.67 28 31.08

Above ` 2,00,000 and upto ` 500,000 259 311 20.08 291 -6.51

Above ` 5,00,000 and upto ` 10,00,000 1,843 1,976 7.22 1,720 -12.95

Above ` 10,00,000 and upto ` 15,00,000 2,757 3,097 12.33 2,919 -5.76

Above ` 15,00,000 and upto ` 25,00,000 4,595 5,641 22.76 5,948 5.44

Above ` 25,00,000 8,288 12,285 48.23 14,048 14.35

Total (3) 17,760 23,331 31.37 24,953 6.95

150 Chapter-5 Operations and Performance of Housing Finance Institutions

Table 36: Trend in Total Disbursements of Housing Loans by HFCs to Individuals for the last three years (Amount in` crore) Particulars 2011-12 2012-13 Growth % 2013-14 Growth % Upto `2,00,000 362 505 39.50 651 28.84

Above ` 2,00,000 and upto ` 500,000 1,912 2,027 6.01 2,166 6.87

Above ` 5,00,000 and upto ` 10,00,000 9,584 12,649 31.98 9,838 -22.23

Above ` 10,00,000 and upto ` 15,00,000 9,732 11,659 19.80 16,625 42.60

Above ` 15,00,000 and upto ` 25,00,000 17,283 22,037 27.51 23,295 5.71

Above ` 25,00,000 29,348 43,712 48.94 51,481 17.77

Total (4) = (1) + (2) + (3) 68,221 92,589 35.72 1,04,057 12.39

Out of total housing loan disbursements of`` 1,04,057 crore to individuals in 2013-14, 2,817 crore was disbursed towards housing loan upto` 5 lakh, which contributed to 2.71 per cent of the total. From the compilation of submitted information, it was observed that out of` 2,817 crore disbursed in the category of slab of housing loan upto`` 5 lakh, 10 crore, ` 207 crore, and ` 2,600 crore were disbursed to the category of borrowers having income of upto`` 5,000, 5,001 to ` 10,000 and more than` 10,000, respectively.

Table 37: Disbursements of Housing Loans by HFCs to Individuals in 2013-14, as per Income Category (Amount in` crore)

Size of Housing Income < ` Income ` 5,001 to Income > ` 10,000 Total Loan 5,000 p.m. ` 10,000 p.m. p.m.

No. Amt No. Amt No. Amt No. Amt

Upto ` 3 lakh 1196 8 22662 179 63493 904 87351 1092

> ` 3 lakh and 116 1 1034 28 50898 1696 52048 1725 upto ` 5 lakh

Total 1312 10 23696 207 114391 2600 139399 2817

NHB has also compiled the State/ UT-wise data on housing loans to Individuals and Builders, on disbursement and outstanding, and also housing loan disbursement in rural and urban areas, from 2011-12.

151 Report on Trend and Progress of Housing in India 2014

Table 38: Trend in HFCs Housing Loan disbursements in different States/ UT as per Urban and Rural Categories. (Amount in` crore) Particulars 2012-13 2013-14 % Growth in State/UT Urban Rural Total Urban Rural Total Total

Andhra Pradesh 7,226 1,014 8,240 7,502 1,024 8,526 3.47 Andaman and Nicobar ------Islands Arunachal Pradesh - 0.68 0.68 5 0.78 6 750.00 Assam 296 8 303 326 2 328 8.25 Bihar 188 3 192 208 5 213 10.94 Chandigarh 382 19 401 340 3 343 -14.46 Chhattisgarh 559 59 619 643 56 699 12.92 Dadra and Nagar Haveli 58 0.38 58 44 0.4 44 -23.45 Daman and Diu 20 0.08 20 20 0.47 20 2.35 Delhi 4,074 110 4,184 3,359 192 3,551 -15.13 Goa 128 48 176 116 47 163 -7.39 Gujarat 3,713 887 4,599 4,371 1,132 5,503 19.66 Haryana 4,484 349 4,833 4,651 347 4,998 3.41 Himachal Pradesh 26 2 28 34 3 37 32.14 Jammu and Kashmir 20 0.09 20 23 - 23 15.00 Jharkhand 301 13 314 351 20 371 18.15 Karnataka 6,724 3,153 9,876 7,454 3,965 11,419 15.62 Kerala 1,842 785 2,627 2,046 894 2,940 11.91 Lakshadweep ------Madhya Pradesh 2,251 281 2,532 2,652 342 2,994 18.25 Maharashtra 19,790 4,227 24,017 24,672 4,634 29,306 22.02 Manipur 0.79 8 9 33 4 37 311.11 Meghalaya ------Mizoram 0.29 7 7 7 17 24 242.86 Nagaland 0.05 - 0.05 1 - 1 1900.00 Odisha 511 18 529 557 29 586 10.78 Puducherry 144 22 166 157 20 177 6.63 Punjab 1,366 185 1,550 1,501 159 1,660 7.10 Rajasthan 2,493 325 2,819 3,017 470 3,487 23.70 Sikkim 51 0.91 52 62 0 62 19.23 Tamil Nadu 11,501 1,904 13,405 11,694 2,100 13,794 2.90 Tripura ------Uttar Pradesh 8,148 304 8,452 9,186 475 9,661 14.30 Uttarakhand 630 67 697 779 98 877 25.82 West Bengal 1,802 60 1,862 2,146 60 2,206 18.47 Total 78,729 13,859 92,589 87,957 16,100 104,057 12.39

152 Chapter-5 Operations and Performance of Housing Finance Institutions

Picture 2A – Trend in HFCs Disbursements of Housing Loans to Individuals

Trend : Karnataka has improved its position over previous year and moved from yellow to blue category.

Picture 3A – Trend in HFCs Outstanding Housing Loans to Individuals

Trend : Jharkhand has improved its position over previous year and moved from green to yellow category.

153 Report on Trend and Progress of Housing in India 2014

Picture 2B - Trend in HFCs Disbursements of Housing Loans to Builders

Trend : Haryana, Maharashtra and Tamil Nadu have improved their positions over previous year, Haryana & Tamil Nadu have moved from green to yellow category, while Maharashtra has moved from yellow to blue category.Assam has moved down from green to white category.

Picture 3B – Trend in HFCs Outstanding Housing Loans to Builders

Trend : Tamil Nadu has improved its position over previous year, and has moved from green to yellow category while Bihar has moved down from green to white category.

154 Chapter-5 Operations and Performance of Housing Finance Institutions

Picture 4 – Trend in HFCs Disbursements of Housing Loans Acquisition/ Construction of New Houses to Individuals

Trend: All the states and Union territories have maintained consistency.

155 Report on Trend and Progress of Housing in India 2014

CHAPTER 6 Institutional performance viz-a-viz Housing Finance

6.1 Categories of Institutions Providing Housing Finance

The housing finance industry today comprises of banks, HFCs and cooperative institutions. NHB was set up at a time when housing finance as a product was in its infancy, and the economy itself was on the threshold of change. From its early years, amid rapidly changing market dynamics, attendant on liberalization and deregulation, NHB had to steer a nascent sector through the transition phase to a competitive, dynamic and market oriented phase. The policy and regulatory framework of NHB has consistently encouraged the industry to adopt market based solutions with due regard to affordability and stability. The quality of assets in the mortgage industry is among the best in the economy.

As of today, the need of long term finance for housing in the country is catered to by the following types of institutions:

a. Financial Institutions b. Scheduled Commercial Banks including Regional Rural Banks c. Scheduled Cooperative Banks (Scheduled State/District/ Urban Cooperative Banks) d. Agriculture and Rural Development Banks e. Housing Finance Companies f. State LevelApex Co-operative Housing Finance Societies g. NBFCs/MFIs/SHGs have also been lending for housing, though in a small way.

The Indian Mortgage Market is expected to show rapid growth in the coming years. Banks share of the housing loans outstanding in the formal housing market accounted for nearly 61%. The share of Banks can be attributed to extensive network and broad customer base, access to stable low-cost funds and other regulatory mandates. However, the share of growth of HFCs can be one indicative of the strength of their focused approach, targeting of special customer segments, relatively better customer service, etc.

6.2 Scheduled Commercial Banks and their Performance in Housing Finance

As on March 31, 2014, housing loans outstanding of SCBs were` 5,40,800 crore, including priority sector lending.17 Housing loans falling under priority sector were` 3, 03,400 crore. Housing loans constituted 9.56 per cent of the total advances of SCBs in the year 2013-14. Housing loans outstanding of the SCBs increased by 18.41 per cent as on March 31, 2014, when compared to 14.59 per cent as on March 31, 2013.

17Sectoral Deployment of bank Credit-March 2014

156 Chapter-6 Institutional Performance viz-a-viz Housing Finance

Table39: Trend in Outstanding Housing Loans of SCBs for the last two years (Amount in` crore)

Details March, 2013 March, 2014 Year on Year Growth (%)

Gross Bank Credit 49,64,177 56,57,231 13.96 Housing Loans 4,56,665 5,40,819 18.43 (Priority & Non Priority) Out of which Housing Loans 2,67,203 3,03,400 13.55 (Priority)

6.2.1 Credit towards Rural and Urban Housing

SCBs through their vast network of branches make disbursements of housing loans to borrowers. However, as reflected below,they still have small reach in rural and semi urban areas where majority of the population resides. Contrarily, SCBs share of metropolitans in the total bank credit is almost 50 per cent, showing the concentration andservicing area preference by SCBs for housing loans. The factors attributing to low credit distribution of housing credit in rural and semi urban areas may be high transaction cost, lack of proper titles, lack of collateral, large unorganized sector and low income households.

Table40:Area-wise Outstanding Housing Loans of SCBs, as on March 31, 2013 (Amount in` crore)

Area Outstanding Percentage to total Rural Area 2,53,538 6.69

Semi Urban Area 6,03,634 15.94 Urban Area 10,19,677 26.92 Metropolitan Areas 19,10,585 50.45 Total 37,87,434 100.00 Source : Banking and Statistical Returns by RBI as on March 31,2013 – Published on October 28, 2014

6.2.2 Classification of Housing Loans as per Interest Rates

Housing loans are generally given at floating rate and have direct linkage to the Base Rate of the particular Bank. The loans are given for longer gestation period. As may be observed from the table below, it is evident that the SCBs were extending maximum housing finance in the range of 9-13 per cent interest rate per annum. Some Banks extend housing loans at lower interest rates under special schemes of refinance from NHB and other mandatory lending such as priority sector.As shown below in the table, 93 per cent of housing loans were disbursed at a rate of interest lower than 13 per cent.

157 Report on Trend and Progress of Housing in India 2014

Table41: Classification of outstanding Housing Loans of SCBs, as per Rate of Interest

Rate of Interest (Percentage) Loan outstanding of SCBs Percentage of total (Amount in ` crore)

Less than 6 3045.79 0.66

6 % to less than 9% 28,937.48 6.23

9 % to less than 10 % 49,216.26 10.59

10 % to less than 11 % 1,94,452.80 41.84

11 % to less than 12 % 1,01,275.62 21.79

12% to less than 13 % 53,853.06 11.59

13 % less than 14 % 16,498.76 3.55

14 % to less than 15 % 8,495.45 1.83

15 % to less than 16 % 5,141.04 1.11

16 % to less than 17 % 2,329.89 0.50

17 % to less than 18 % 840.95 0.18

18 % to less than 20 % 549.87 0.12

20 % and above 74.23 0.02

Total 4,64,711.20 100.00 Source : Banking and Statistical Returns by RBI as on March 31,2013 – Published on October 28, 2014

6.2.3 Details of Housing Loans by Public Sector Banks

NHB is collecting the slab-wise Housing Loan data from Public Sector Banks on quarterly and yearly basis in five different slabs namely up to`` 2 lakh, above 2 lakh and up to ` 5 lakh, above ```5 lakh and up to 10 lakh, Above 10 lakh and up to ` 25 lakh and above ` 25 lakh. The data so captured consists of attributes like total housing loans disbursed during the quarter, housing loans outstanding as on the last day of the quarter and percent of NPAin respect of the slab-wise loans.

As per the data available from 26 PSBs, the total outstanding of housing loans was stood at ` 3,75,090 crore, as on March 31, 2014, and the total disbursements of housing loans during the year 2013-14 by these 26 PSBs was` 98,787 crore.

Table 42: Comparison of PSBs Housing Loans for the last two years (Amount in` crore)

Details 2012 2013 Growth (%)

Total Disbursement of 71,857 98,787 37.48 Housing Loans

Total Outstanding of 3,11,982 3,75,090 20.21 Housing Loans

158 Chapter-6 Institutional Performance viz-a-viz Housing Finance

Table 43: Trend in Slab-wise Housing Loans of PSBs for the last two years (Amount in` crore)

Slab wise Housing FY 2012-13 - FY 2013-14 Loan (` ) Disbursed O/S NPA (%) Disbursed O/S NPA (%)

Upto 2 Lakh 2,957 6,165 11.52 1,883 5,801 10.57

Above 2-5 Lakh 4,028 36,659 4.48 3,768 33,991 3.34

Above 5-10 Lakh 11,281 69,436 3.01 12,464 74,866 1.79

Above 10-25 Lakh 29,912 1,19,362 1.41 37,680 1,45,694 0.95

Above 25 Lakh 23,678 80,359 1.01 42,993 1,14,737 0.62

Total 71,857 3,11,982 2.35 98,787 3,75,090 1.38

It may be observed from the above table that the loan volumes in above` 10 lakh to` 25 lakh and above ` 25 lakh constituted major portion of the total housing loans disbursed. Also, in the total outstanding loans the slab of above`` 10 lakh to 25 lakh constituted the maximum. This slab also shows low level of NPAs'.

Graph 21: Trend in Outstanding Housing Loans of PSBs

Percentage to total

Upto 2 Lakh 2-5 Lakh 5-10 Lakh 10-25 Lakh Above 25 Lakh FY 2012-13 1.98% 11.75% 22.26% 38.26% 25.76% FY 2013-14 ** 1.55% 9.06% 19.96% 38.84% 30.59%

6.3 The National Co-operative Housing Federation of India18

The National Co-operative Housing Federation of India (NCHF) is the nationwide organization of the Indian Cooperative Housing Movement. The basic thrust of its formation was to have an organization at the national level to assume the responsibility of promoting, developing and coordinating the activities of housing cooperatives in the country.

18National Cooperative Housing Federation

159 Report on Trend and Progress of Housing in India 2014

The cooperative housing structure consists of primary housing cooperatives at the grass root Level and Apex Cooperative Housing Federations. The National Cooperative Housing Federation of India (NCHF) is the nationwide organization of the Indian Cooperative Housing Movement. The basic thrust of its formation was to have an organization at the national level to assume the Responsibility of promoting, developing and coordinating the activities of housing cooperatives in the country. These Federations have so far disbursed` 12128.62crore to primary housing cooperatives for construction of dwelling units for their members.

Table 44: Trend in Borrowings, Sanctions and Disbursements of Apex Cooperative Housing Federations (Cumulative) for the last three years (Amount in` crore)

Type 2011-12 2012-13 2013-14 Amount Borrowed 10,555.28 10,689.16 10,755.40 Loan Sanctioned 12,063.36 12,430.43 12,574.47 Loan Disbursed 11,571.71 11,971.21 12,128.62

Table 45: Trend in Housing Loan Disbursed and Units Constructed by ACHFs: (State Wise) for the last three years (Amount in` crore)

State 2011-12 2012-13 2013-14

Units Units Units Constructed/ Amount Constructed/ Amount Constructed/ Amount Financed Financed Financed Andhra Pradesh 595 44.44 447 65.09 n.a. n.a. Assam 6 0.07 - - 815 n.a. Bihar ------Chandigarh 800 33.00 - - n.a. n.a. Delhi 769 101.57 350 104.17 n.a. 67.34 Goa 31 3.15 38 4.77 26 2.63 Gujarat ------Haryana n.a. 071 n.a. 4.40 840 1.28 Himachal Pradesh n.a. 0.81 n.a. 1.43 n.a. 1.18 Jammu & Kashmir n.a. 5.18 n.a. 32.12 n.a. n.a. Karnataka 447 61.63 291 9.65 139 1495 Kerala 6,255 183.93 7,261 128.97 18,940 66.61 Madhya Pradesh - - - - n.a. n.a. Maharashtra ------Manipur - - - - n.a. n.a. Meghalaya - - - - n.a. n.a. Odisha ------Pondicherry n.a. 2.90 11 3.23 43 3.30 Punjab 2,527 48.02 834 45.66 n.a. n.a. Rajasthan 4 0.08 - - 4 0.13 Tamil Nadu - - - - n.a. n.a. Uttar Pradesh 10 3.59 - - - - West Bengal 152 8.06 - - - - Total 11,596 467.44 9,262 399.50 20,807 157.41

160 Chapter-6 Institutional Performance viz-a-viz Housing Finance

6.4 Microfinance Institutions

Other than Scheduled Commercial Banks, Housing Finance Companies, and Cooperative Institutions, Microfinance Institutions or Non-Governmental Organizations have made a dent through local participative approach in catering to the housing finance needs of the low income segments of the society. The MFIs work on the model of SHGs linked with Banks. NHB has recognized the Housing Micro Finance Institutions as an important channel for delivering housing finance to the unserved section of society and accordingly developed a suitable Housing Microfinance Scheme for them. NHB in its endeavour to provide housing to the unserved segments of the society pioneered a Housing Micro Finance (HMF) Scheme in 2004. Cumulatively, till June 30, 2014, NHB has sanctioned loan amount of ` 101.68 crore to 32 microfinance institutions, for financing 40,210 urban and rural housing/sanitation units. The Housing Microfinance Programme of NHB is spread across 11 states which include Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Orissa, Gujarat, Kerala, Assam, Uttar Pradesh, West Bengal and Madhya Pradesh. The beneficiaries include farmers, housemaids, petty traders, artisans, dairy workers and other low income segments. More than 90 percent of the beneficiaries are women. The approximate income levels of the beneficiaries range between`` 5000/- to 7000/- per month. Besides, Bank has also opened a specialized window for Water and Sanitation programmes being taken up by MFIs for their members of Self Help Groups. These programmes form an integral part of the HMF programme of the Bank.

161 Report on Trend and Progress of Housing in India 2014

CHAPTER 7 Area of Focus Sustainable Energy Efficient Housing

7.1 Introduction

Globally, the building sector accounts for more electricity use than any other sector i.e., 42 per cent 19 . With increasing urbanization, the number and size of buildings in urban areas will increase, resulting in an increased demand for electricity and other forms of energy commonly used in buildings.

Currently, India is experiencing an unprecedented demographic growth along with a steady economic growth. Cities contribute significantly to the growth of any country's economy. Indian cities contribute about 60% to the country's gross domestic product (GDP), and by 2030, this percentage would increase to 70. As per 2011 Census, about 31.16% (377 million) of India's population were residing in urban centers. This percentage is expected to further increase to 40% by 2030. According to International Energy Agency (IEA), due to the swift urban sprawl and transformation of cities into economic hubs, India will see maximum growth in energy consumption till 2035 20 . It will be even more than China and over 6 times more than United States and 5 times more than Russia. Though the growth rate will be highest, the overall energy consumption will still be much lower as compared to United States and China.

The estimated electricity consumption in India increased from 4,11,887 GWh during 2005-06 to 8,52,900 GWh during 2012-13, showing a CAGR of 9.53%. The increase in electricity consumption is 8.62% from 2011-12 (7,85,193 GWh) to 2012-13 (8,52,900 GWh)21 . Of the total consumption of electricity in 2012-13, industry sector accounted for the largest share (44.87%), followed by domestic (21.79%), agriculture (17.95%) and commercial sectors (8.33%). Per-capita Energy Consumption (PEC) (the ratio of the estimate of total energy consumption during the year to the estimated mid-year population of that year) increased from 3,497.59 KWh in 2005-06 to 6748.61 KWh in 2012-13, a CAGR of 8.56%. The annual increase in PEC for 2012-13 over 2011-12 was 8.76%.

Graph 22: Trends in Consumption of Electricity* in India GWh

900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0

1970-71 1975-76 1980-81 1985-86 1990-91 1995-96 2000-01 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

19United Nations Industrial Development Organization (UNIDO)report on Energy efficiency in buildings 20EIA Annual Energy Outlook 2013 21Energy Statistics 2014, released by MOSPI, GoI

162 Chapter-7 Area of Focus: Sustainable Energy Efficient Housing

Graph 23 : Sector-wise Consumption of Electricity (Utilities) during 2012-13

Traction & Railways Commercial

Domestic

Agriculture

Industry

7.2 Energy Consumption in Residential Buildings

Building construction and its facility maintenance services consume a significant energy depending upon its geographic location, design, type of construction and materials used and other facilities provided. This is primarily because energy-intensive solutions are not sought while constructing a building and meeting its demands for cooling, ventilation, and lighting and at times for heating in earlier days. In India, the vast differences - in residential habits of rural and urban, climatic zones, income groups requirements, construction practices, availability of variety of building materials etc. have led to different housing patterns, which influence energy consumption considerably. Particularly, urban housing and commercial complexes consume very high energy due to provision of comforts such as air-conditioners, lifts / escalators, pumping etc. Sustainable building utilizes environmentally conscious design techniques in order to reduce the negative environmental impact of buildings and infrastructure. Enhancing efficiency and moderation in the use of energy is an important aspect of sustainability. The estimated consumption of electricity by residential building is shown in the graph below 22 .

Grap 24 : Future trend of building sector in India

70000 60000 50000 40000 30000 20000

In Billion Sq.m. 10000 0 Residential Commercial & Hospitality Retail Office

2005 2030

22Report on Constructing change: Accelerating energy efficiency in India's buildings market'

163 Report on Trend and Progress of Housing in India 2014

It is estimated that the total constructed built-up area would increase from 8 billion square meters in 2005 to 41 billion square meters in 2030 (about 5-fold increase)23 . Out of this total estimated built-up area by 2030, only 30% has been constructed. This situation is significantly different from the developed countries, where bulk of the buildings is already constructed. This provides both challenges and opportunities to building sector stakeholders to develop this building stock appropriately. Energy management practices should be encouraged in the planning of buildings and the city form. Buildings and city forms that are energy efficient and use sustainable energies like solar and wind energies should be considered. There are fragments of evidences in India of settlements using solar power, water recycling techniques and waste management practices. But in general, the environment friendly techniques are yet to be practiced in urban areas, especially in large cities where the differences would be felt. The environmental sustainability of housing is concerned with the impacts of housing on the environment and climate change, as well as the impacts of the environment on housing itself.

As per the report of the Central Electricity Authority (CEA), the residential sector consumes approximately 22% of the total electricity generated in India, which is about three times more than that of the commercial buildings. One of the reasons for this is that the built-up area of residential buildings is about seven times more than that of commercial buildings. The energy use intensity of the residential buildings is expected to grow because of the increase in air-conditioned area, more access to electricity, and the increase in ownership and usage of appliances by the tenants.

7.3 Towardsachieving energy efficiency

Several government and private programs may exist to advance building efficiency in India. Current Government policies, building rating systems and active stakeholders provide a foundation for accelerating efficiency. Yet, as India's real estate market continues to grow, the current policy framework needs to be further developed and implemented by all efficient stakeholders.

The implementation of energy efficiency measures and energy codes in buildings can help to ensure that new buildings use energy efficiently, and this can reduce building energy use by 50% or more compared to buildings designed without energy efficiency measures 24 . The implementation of energy efficiency measures into residential buildings cannot only help consumers save significant costs on their energy consumption but also contribute towards environmental preservation and sustainability. Energy efficiency is the fastest, cleanest, and cheapest way to meet energy needs - India alone could save $42 billion each year by largely improving energy efficiency in buildings25 . According to NRDC (2011), if developers across India Implemented standard energy efficiency measures in new construction and major retrofits, the country could avoid the need for 2988 MW of generation capacity.

There is wide support for the adoption of energy efficient measures in buildings in India both at the Central and State Government level, but, as yet, little has been done by way of mandating legal requirements to that effect. In certain States, Governments are encouraging green buildings but not so far with any mandatory standards except for large projects. The Government of India has introduced the necessary standards, organizations to provide guidelines, technical and financial assistance for effective implementation of energy conservation in buildings. Towards energy improvement, the Government of India enacted the followingActs Codes:

l Energy Conservation Act, 2001: The Act provides for the legal framework, constitutional arrangement and a regulatory mechanism at the Central and State level to embark upon energy

23Report on Constructing change: Accelerating energy efficiency in India's buildings market' 24UNEP SBCI Report on Buildings and Climate Change: Summary for Decision-Makers 25NRDC & ASCI (2011), Saving Energy: Taking Building Efficiency to New Heights

164 Chapter-7 Area of Focus: Sustainable Energy Efficient Housing

efficiency drive in the country. There are short term and long term measures, which enforce implementation of energy policies in phased manner. l Bureau of Energy Efficiency, 2002: Bureau of Energy Efficiency (BEE) operates complete pilot phase of programmes for energy efficiency in government buildings and prepare action plan for wider dissemination and implementation. l Energy Saving Companies: They undertake energy efficiency projects through third party financing which enables the consumers to save on energy cost to a maximum extent. l National Building Code (Revised) 2005: Several changes are brought out in the recently revised National Building Code with respect to energy conservation. Classification of climatic zones, more details on lighting and ventilation, density norms, use of solar energy, extending energy conservation measures to commercial buildings etc. are the provisions provided. l Energy Conservation Building Code: The Energy Conservation Building Code (ECBC), developed by the Bureau of Energy Efficiency (BEE), prescribes a minimum standard for energy use in new and major retrofits of buildings. The connected load requirement for buildings to comply is 100 kW or 120 kVA, which enables commercial and high- rise residential buildings (approximately 5 stories or higher) to come under the code's purview. The ECBC establishes minimum requirements for energy-efficient building design and construction. l National Action Plan on Climate Change: The National Action Plan on Climate Change (NAPCC) was released by Honourable Prime Minister of India in June, 2008, outlining existing and future policies and programs addressing climate mitigation and adaptation. The Plan identifies eight core "national missions" running through 2017 including the National Mission on Sustainable Habitat, which seeks to promote sustainability of habitats through improvements in energy efficiency in buildings, urban planning, improved management of solid and liquid waste, model shift towards public transport and conservation through appropriate changes in legal and regulatory framework and the National Mission on Enhanced Energy Efficiency (NMEEE) and directs ministries to submit detailed implementation plans to the Prime Minister's Council on Climate Change by December 2008. Emphasizing the overriding priority of maintaining high economic growth rates to raise living standards, the plan "identifies measures that promote our development objectives while also yielding co-benefits for addressing climate change effectively." It says these national measures would be more successful with assistance from developed countries, and pledges that India's per capita greenhouse gas emissions "will at no point exceed that of developed countries even as we pursue our development objectives." Para 4.2 of the NationalAction Plan on Climate Change mandates:

l A market based mechanism to enhance cost effectiveness of improvements in energy efficiency in energy-intensive large industries and facilities, through certification of energy savings that could be traded. (PerformAchieve and Trade)

l Accelerating the shift to energy efficient appliances in designated sectors through innovative measures to make the products more affordable. (Market Transformation for Energy Efficiency)

l Creation of mechanisms that would help finance demand side management programmes in all sectors by capturing future energy savings. (Energy Efficiency Financing Platform)

l Developing fiscal instruments to promote energy efficiency (Framework for Energy Efficient Economic Development)

l Further, during the 11th Five Year Plan, the Bureau of Energy Efficiency (BEE) had

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introduced standards and labelling programme for 13 household appliances. The labels were made mandatory for four appliances, namely, frost-free refrigerators, room air- conditioners, tube lights, and transformers. It is estimated that the standards and labelling programme had avoided an installed capacity of 7500 MW during the 11th Plan.

l During the 12th Five Year Plan (2012-17), the Super-Efficient Equipment Programme (SEEP) will incentivize the sale of super-efficient fans, light emitting diode (LED) lighting, and tube lights for their large-scale adoption. This would build confidence in manufacturers to invest in the development, manufacturing, and marketing of these products, which otherwise would be limited because of the higher upfront cost of these products. The incentives will be gradually decreased with increase in sales and reduction of the product first cost. It is estimated that SEEP for efficient fans and lights alone will avoid 1500 MW of installed capacity during the 12th Plan.

Energy efficiency in residential buildings is also promoted through various voluntary building rating systems such as Indian Green Building Council (IGBC) Green Homes, Green Rating for Integrated Habitat Assessment (GRIHA), Small Versatile Affordable (SVA) GRIHA and Eco-housing. Incentives like fast-track environmental clearance of pre-certified projects by the Ministry of Environment and Forests (MoEF) and additional floor area ratio FAR and tax incentives by some urban local bodies (ULBs) are also available.

7.4 Steps taken by NHB

National Housing Bank (NHB), through its "Promotional Programme for Energy Efficient New Residential Housing in India" seeks to address the challenges associated with the implementation of energy efficient measures in residential buildings and promote the adoption of energy efficient measures in residential buildings through a slew of measures.

KFW, the German Development Bank, is financing a Promotional Programme for Energy Efficient New Residential Housing in India. This Programme was initiated jointly by NHB and KfW in 2008 pursuant to Indo - German Government-to-Government negotiations. Under the programme, a line of Credit of EURO 50 million was provided to NHB for refinancing individual home buyer loans for new residential housing, meeting a minimum of 30% improvement in energy efficiency over the benchmark building in case of active measures and 18% improvement in case of passive measures. The focus of the programme is on typical, middle income apartment developments.

The objective is the successful implementation of a "Promotional Programme for Energy Efficient New Residential Housing in India", which would contribute to a sustainable energy supply by encouraging the use of energy efficient technologies and building methods (energy efficient design, energy efficient heating, lighting and cooling systems or improved insulation to improve energy efficiency in housing).

The same would result in a mitigation of climate change resulting from CO2 emission savings through an increase in energy efficiency.

With respect to the funding mechanism, the line of credit extended to NHB by KfW, Germany will be made available to Primary Lending Institutions (PLIs) viz. Banks and Housing Finance Companies under a Refinance Scheme developed for the Programme. With respect to future development, training and capacity building under the Programme, a 'Facilitator' has been appointed. The facilitator is responsible for overall coordination with Primary Lending Institutions and building developers for developing initial pipeline for identification/development of ready building projects in order to ensure early utilization of funds available under the Programme. For facilitating the calculation of potential energy savings by a household under the Programme, a very simple and ready-to-use assessment tool had been specifically developed by Fraunhofer IBP, Germany and TERI, who were engaged as external

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experts. IT-toolkit calculates the energy need of a building as a whole and the potential savings offered by active and passive energy efficiency measures based on the building design. The IT toolkit allows the user to enter data regarding the parameters of the building project being assessed, key features of the building envelope such as geometry, orientation and building materials, and data on the technologies used for space cooling, heating, lighting and hot water.

Besides information on the national benchmark regarding energy use in the residential sector in India, the toolkit includes case studies on energy efficient residential buildings and provides information on select energy efficiency technologies. Based on the level of energy savings by way of adoption of various energy efficient parameters (active and passive measures), an initial certification is provided to the potential individual borrowers for use in the loan procurement process. The certification and accreditation for projects under the Programme are provided by Fraunhofer, IBP and TERI. This IT- toolkit is available under public domain and can be accessed through the NHB-KfW Homes EE Program website http://www.ee-homes.com/

Further, NHB's Refinance Scheme for Installation of Solar Water Heating and Solar Lighting Equipments in Homes, to promote use of solar equipment in the domestic context has till date directly impacted the life of more than 16,000 underserved households.

7.5 Benefits to various Stakeholders under the Programme are -

Benefits for Building Developers

l First-mover in the promising field of energy efficiency housing and a step towards CSR.

l The Certification and labeling helps improved marketability of the project and adds value to the project which helps attracting customers in the highly competitive residential housing market. l Cost-free advisory services and training for energy efficiency measures. l Get access to our easy-to-use IT-toolkitResBuild to calculate energy savings.

Benefits for PLIs and HFCs

l Attractive refinancing conditions from NHB, usually rebate of up to 25 basis points. l Front-runner in the promotion of future-oriented financial products. l Benefits from extensive training on energy efficiency in the housing sector. l Increased attractiveness to customers. l Strengthened corporate social responsibility portfolio.

Benefits to Occupants / End users

l Low energy, waste disposal and water cost l Benefits of lower rate of interest passed on by the PLI to the beneficiary. l Lower operational and maintenance costs. l Lower emissions and environment costs. l Better health and satisfaction. l Demonstration of commitment to sustainability and environmental stewardship.

7.6 Building Energy Efficiency

Everyone benefits from energy efficiency in buildings, from workers and landlords to tenants and civil society. Identifying the groups responsible for the successes of, and obstacles to, energy efficiency is critical to building a roadmap with targeted actions for each stakeholder to capitalize on the opportunity to save energy. But the challenges associated with the implementation of energy efficient measures in

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residential buildings are many and varied. There is lack of awareness regarding the technical and financial potential of energy efficient solutions on the part of end-users. The limited availability and high costs of energy efficient construction material and appliances have hindered their mass adoption

To add to it, there are concerns on the part of end users that incremental expenditure on energy efficiency measures may inflate their purchase consideration. From the technical aspect, it cannot be ignored that specialists like architects and energy auditors lack sufficient expertise in this area of work as it is still in a nascent stage. Moreover, technical standards and calculation tools have not been widely introduced to support implementation and adoption. From the legal perspective, much needs to be done with respect to the development and propagation of energy efficiency codes for buildings in the country and mandate their legal requirement.

India's economic growth can only be sustained with corresponding to growth in infrastructure. Presently the growing demand is being met by crumbling infrastructure, such as road networks, city transport, water and sanitation, etc. A solution to the contradiction requires a massive enlargement of urban infrastructure, which will further require newer green and sustainable techniques for building this infrastructure. These newer techniques encapsulate the foundation of green buildings. Energy consumption and associated greenhouse gas emissions will continue to rise unless actions to direct the construction industry towards sustainable consumption and production are urgently taken. The objective of sustainable development is to reduce the baseline energy consumption through adoption and implementation of efficiency measures in buildings, by the use of energy efficient passive and active techniques.

Compact Energy efficiency is a growing policy priority for many countries around the world. It is widely recognized as the most cost-effective and readily available means to address numerous energy-related issues, including energy security, the social and economic impacts of high energy prices and concerns about climate change. At the same time, energy efficiency increases competitiveness and promotes consumer welfare.

All the stakeholders viz. the Central and State Governments by way of setting standards for the bottom of the buildings market and supporting the top of the market to accelerate energy efficient construction. The real estate developers and the Financial institutions need to work together to make the concept of Energy efficiency more affordable and sustainable. The recent launch of three landmark initiatives for Energy Efficiency by the Government of India viz., "Design Guidelines for Energy Efficient Multi-Storey Residential Buildings and Star Ratings for Diesel Gensets and for Hospital Buildings"26 are supposed to encourage all stakeholders to take part in the implementation energy efficiency initiatives.

Box6:Design Guidelines for Energy-efficient Multi-storey Residential Buildings by BEE - Recommendations on energy-efficiency features for consideration at the design stage of multi-storey residential buildings

The six sections under which these recommendations are featured in are:

1. Building massing and spatial configuration l Recommendation 1: Orient the buildings to minimize solar exposure on external vertical surfaces l Recommendation 2: Select the building shape to minimize solar exposure on wall surfaces l Recommendation 3: Arrange building blocks to benefit from mutual shading to minimise solar

26Bureau of Energy Efficiency (BEE) (Website:http://www.bee.india.nic.in)

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exposure on walls during summer months 2. Building envelope l Recommendation 4: Incorporate passive design measures for walls and windows for reduced energy consumption and improved thermal comfort l Recommendation 5: Design for adequate day-lighting l Recommendation 6: Insulate the roof and provide reflective surface

3. Space cooling l Recommendation 7: Design for raised cooling set-point of around 28 °C l Recommendation 8: Design the space-cooling system so as to utilise the full potential of evaporative cooling and fans l Recommendation 9: Incorporate energy-efficiency measures in the air-conditioning system l Recommendation 10: Design for quick and efficient evacuation of hot air generated in the kitchen

4. Appliances l Recommendation 11: Select higher BEE star-labelled energy-efficient equipment and appliances

5. Common services l Recommendation 12: Energy-efficient lighting design for common areas l Recommendation 13: Energy-efficient community water pumping system l Recommendation 14: Incorporate energy-efficiency design features in the design of lifts

6. Renewable energy integration l Recommendation 15: Incorporate energy-efficiency design features in the design of lifts

169 ReportChapter-7 on TrendArea and ofProgress Focus: ofSustainable Housing inEnergy India 2014Efficient Housing

Chapter 8 Way Forward

House is pivotal for mankind's moral and substance development ever since the dawn of civilization. Adequate housing is essential for human survival with dignity. There are many things that we would find difficult, if not impossible to do without good-quality housing. Housing shortage is a universal phenomenon. It is more acute in developing countries. The housing dimension in India has been changing in recent years. India has initiated many reforms in housing that have taken many forms and manifestations characterized by the reduction in social allocation, cutbacks in public funding and promotion of a real estate culture in close partnership between the Government and private actors.

Since home life affects the very foundation of an individual's life, the house becomes an important part of it and housing attains the top priorities for most people, regardless of their income levels. There has been increasing concern about the housing condition of the poor in the slums settlements in housing and investment policies. The declining effectiveness of housing finance institutions coupled with economic and fiscal crises have made governments more aware of the need to promote savings, reduce subsidies and mobilize domestic resources and motivate the involvement of private financial institutions. Housing finance has risen to the top of research and policy agendas in recent years.

As per 2011 census, the country had a population of 1210.98 million out of which, 377.10 million (31.16%) lived in urban areas. During 2001-2011, the urban population of India grew at a CAGR of 2.8% resulting in the increase in level of urbanization from 27.81% to 31.16%. This growing concentration of people in urban areas has led to problems of land shortage, housing shortfall and congested transit and has also severely stressed the existing basic amenities such as water, power and open spaces of the town and cities. According to the 201- census, the housing stock in urban India stood at 78.48 million for 78.86 million urban households. Through the gap between household and housing stock is narrowing, actual shortage is high due to a certain part of current stock being dilapidated and people living in congested dwelling. There is a gap between the demand and supply of housing (both in terms of quantity and quality) in urban India. India possesses the elements of very strong demand growth in housing market in the coming decades.

Housing in India has emerged as one of the most vibrant and dynamic sector for the country's economy, contributing approximately 5%-6% of the country's GDP. The contribution of the real estate sector to India's gross domestic product (GDP) has been estimated at 6.3% in 2013 and the segment is expected to generate 7.6 million jobs during the same period. It is also expected to generate more than 17 million employment opportunities across the country by 202527 .

The housing finance industry today comprises the entire banking sector, Housing Finance Companies (HFCs), cooperative and other institutions viz. ACHFS, ARDBs, MFIs, NBFCs, etc. The policy and regulatory framework of the regulators has consistently encouraged the industry to adopt market based solutions with due regard to soundness, affordability and stability. The quality of assets in the mortgage industry is among the best in the economy.

27Confederation of Real Estate Developers' Associations of India-, “Report on assessing the economic impact of India's real estate sector - 2013

170 Chapter-8 Way Forward

Retail housing finance is, today, available from a diverse set of institutions at competitive terms as the sector has become increasingly demand driven. Facilitating and catalyzing the credit flow in the housing sector, NHB's enabling policies have supported the expansion in home ownership in the country. The number of housing finance companies has grown over the years and was 59 in number at the end of June 30, 2014. NHB, through the years, has sought to perform its multiple roles in a mutually synergic manner, consistent with its Charter and has endeavored to develop a sound, stable and sustainable housing finance system in the country. Introduction of new products, which connect the housing finance sector to the larger economy, is the emerging need of the sector. NHB's efforts are also directed at such initiatives that include development of the securitization market, credit enhancement measures such as mortgage guarantee / insurance, conceiving covered bonds in the Indian context, risk mitigation through Central Registry, title insurance, etc. With NHB's catalyzing role, the balance sheet of the sector has consistently grown and improved in terms of flow of credit and quality of assets.

One of the biggest challenges facing the housing finance industry today is the lack of formal credit flow to the lower income segments for their housing needs. This has resulted in a huge shortage of housing for these segments, and a multi-pronged effort is required to address the problem in all its dimensions. Among other things, the recently set up 'Credit Risk Guarantee Fund Trust for Low Income Housing', established by the Government of India and administered by NHB, is expected to leverage institutional financing for the smaller borrowers.

NHB through its refinance window provides the retail lending institutions with an economical and efficient source of raising funds for their housing finance operations. Today, NHB offers a range of refinance products aimed at fulfilling the needs of the various sub-segments of the market, from rural housing to urban low income housing, housing for women, energy efficient housing and solar lighting and water heating equipment. NHB is also engaged in developing products for low and moderate income households. NHB is offering this product to the primary lending institutions at concessional rates as an incentive for them to extend long term fixed rate loans to the vast segments of the population in need of such support.

The initiatives by the Government of India like allowing FDI up to 100 per cent in development projects for townships and settlements, approval of the Real Estate (Regulation and Development) Bill, 2013, setting up the Urban Housing Fund and impetus to Subsidy Schemes like the Rajiv Rinn Yojana have further lent strength to the sector.

The recent budget announcements related to housing sector are very encouraging. With the allocation of ``8,000 crore to support rural housing and 4,000 crore for affordable housing to NHB the Flow of credit for housing to the rural and urban poor/EWS/LIG segments will increase. Further, the Government has mandated to provide 'Housing for All by 2022'. With this objective the Hon'ble Finance Minister in his Budget Speech announced the setting up of a Mission on Low CostAffordable Housing which will be anchored in the National Housing Bank. The Scheme will incentivize the development of low cost affordable housing. Similar Policy- based efforts like providing tax sops for the Real Estate Investment Trusts (REITs), as announced in the Union Budget of 2014-15, could result in extracting new growth opportunities through Rental, Affordable and Senior Citizen Housing projects that can increase the depth of the industry. REITs have been successfully used as instruments for pooling of investment in several countries and such instruments will definitely attract long term finance from foreign and domestic sources including the NRIs. REITs would reduce the pressure on the banking system while also making available fresh equity.

Mortgages are the retail banking opportunity in an economy. The total mortgages in the books of the banks have grown from 1.5 percent to 10 percent of the total bank advances in the last decade. The ratio of total outstanding mortgages to the GDP is currently around 9 per cent. If by 2020, this ratio were to reach 20 percent, a number similar to that of China, we could expect the mortgage industry growing at an average rate of over 20 percent during the next decade.

To enable the housing finance market to function more efficiently, there is a need for the adoption of uniform practices by the housing finance industry relating to matters like appraisal and documentation, conversion of

171 Report on Trend and Progress of Housing in India 2014 fixed rate loans into floating rate loans etc.Agreater degree of transparency in dealings with the customers will enable them to exercise informed choices about products and lending institutions.

To conclude, housing finance in India has done remarkably well particularly over the last two decades. The market needs to be deepened and widened. Gaps are required to be filled in both supply and demand sides and calls for innovations, orientation towards the un-served and under-served segments of the society.

172 Abbreviations ARDBs Agriculture Rural Development Bank ACHFs Apex Cooperative Housing Federations APL Above Poverty Line BPL Below Poverty Line CERSAI Central Registry of Securitization Asset Reconstruction and Security Interest of India CEO Chief Executive Officer CII Confederation of Indian Industry CPWD Central Public Works Department CRGFTLIH Credit Risk Guarantee Fund Trust for Low Income Housing CTR Cash Transaction Report CPI Consumer Price Index DFI Development Finance Institution ECBs External Commercial Borrowings EEHRS Energy Efficient Housing Refinance Scheme EMI Equated Monthly Installment EWS Economically Weaker Section GDP Gross Domestic Product GFD Gross Fiscal Deficit GJRHRS Golden Jubilee Rural Housing Refinance Scheme GoI Government of India . GRIDS Grievance Registration & Information Database System HFCs Housing Finance Companies HFIS Housing Finance Institutions HUDCO Housing and Urban Development Corporation Ltd ISHUP Interest Subsidy Scheme for Housing the Urban Poor IT Information Technology JNNURM Jawaharlal Nehru National Urban Renewal Mission KYC Know Your Customer NAC NotifiedArea Councils LAN Local Area Network LIG Lower Income Group NGOs Non-Governmental Organizations NPA Non-PerformingAsset MBS Mortgage Backed Security MoHUPA Ministry of Housing & Urban Poverty Alleviation MOU Memorandum of Understanding MIG Middle Income Group NCHF National Cooperative Housing Federation of India NHB National Housing Bank NIPFP National Institute of Public Finance and Policy PLIs Primary Lending Institutions PMLA Prevention of Money Laundering Act, 2002 PSBs Public Sector Banks PPP Public Private Partnership RRY Rajiv Rinn Yojana

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RBI Reserve Bank of India REITs Real Estate Investment Trusts RHF Rural Housing Fund RML Reverse Mortgage Loan RMLA Reverse Mortgage Loan enabled Annuity RO Regional Office RRBs Regional Rural Banks SCBs Scheduled Commercial Banks SLCC State Level Coordination Committee UCBs Urban Co-operative Banks ULBs Urban Local Bodies USAID United States Agency for International Development

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