Upload
nishita-jain
View
220
Download
0
Embed Size (px)
Citation preview
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
1/35
HOUSING FINANCE
MARKET IN INDIA
1
Workshop on Housing Finance, Mongolia
June 27, 2011Mongolia
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
2/35
ECONOMIC HIGHLIGHTS
2
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
3/35
Social Demographics
3
Population: 1.03 billion (2001 Census) of which about 28% reside in
the urban areas. Increasing trends of urbanization with massmigration towards cities.
Young population with median age around 24.9 years.Approximately 54% of the population aged 24 years and below.
A significant proportion (57.7%) of the population in the working agegroup of (15 59) years.
Around 26.1% of the population living below the poverty line.
Increasing per capita income in recent years has led to the growth ofan emerging middle class with growing purchasing power, providingnecessary impetus for growth of consumerism.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
4/35
INDIAN ECONOMY - HIGHLIGHTS
Strong macroeconomic fundamentalsbacked by sustained growth. Services sector accounts for around 65-70% of the GDP. One of the most attractive destinationsfor FDI globally. Indication of stronginvestor confidence. Progressive measures towardsDeregulation and Globalization leading toglobal integration. Financial sector reforms backed byrobust regulatory and prudential normsleading to a well-developed banking
system and vibrant capital market. India s Mega -Cities of Mumbai &Delhi will be the word s 2nd and 3rdlargest cities by 2015. Jones LangLaSalle.
Rapid GDPGrowth
Shift towards marketbased approach
All roundInfrastructureimprovements roads,telecom, ports
FinancialSectorReforms
4
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
5/35
Indian Economy Recent Trends
5
Economic recovery during 2010-11 with GDP growth estimated at 8.6%as compared to 8% during 2009-10. (CSO Estimates)
Industrial growth recorded at 8% during 2010-11, while the Servicessector grew at 9.6% during the period.
Accentuated inflationary pressures in the economy mainly attributed tospurt in food prices during the year mainly due to supply sidebottlenecks.
Phased exodus from expansionary monetary policy towards monetarytightening so as to curb mounting inflationary pressures.
Trade Deficit declined to US$ 88.96 billion during 2010-11 (April-Jan)from a peak of US$ 118.4 billion during 2008-09.
Foreign Exchange Reserves stood at US$299.2 billion (January, 2011) ascompared to US$ 252 billion (March, 2009)
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
6/35
GDP Growth Trend
6
Source: Macro-economic &
Monetary Developments, RBI,2010-11
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
7/35
HOUSING CONDITIONS
7
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
8/35
Housing Stock
8
As per Census 2001, total housing stock in India was about 249million units.
29% of the housing stock was in the urban areas and 71% inrural areas.
Growing population and sustained urbanization have kept theavailable housing stock under increasing pressure.
Sustained improvement in the quality of housing stock in thecountry between 1961-2001.
A majority of the households live in permanent ( pucca) or semi-permanent ( semi-katcha) houses in rural as well as urban areas.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
9/35
Housing Shortage & Slum Population
9
Housing shortage in India has witnessed an increasing trend over the years. The housing shortage in urban areas at the beginning of 2007 is about 24.71
million units and is likely to go up to 26.53 million units by 2012.
In rural areas housing shortage is estimated to reach 47.43 million units by2012.
99% of the shortage in urban areas pertains to Economically Weaker Sectionsand Lower Income Groups.
As per the Report of the Committee on Slum Statistics/Census, GOI, theslum population in 2001 was 75.26 million (26.31% of the urban population).
One out of every four persons reside in slums in India s cities and townswith the proportion of population living in slums and squatter settlementssignificantly higher in metropolitan cities.
Slum population is expected to increase to 93 million by 2011 and 104.6million by 2017.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
10/35
Stakeholders in Housing
10
Stakeholders Extent of Participation Focus Areas
Government Central andState Level Formulating andimplementing policies andprograms particularly for theEWS/LIG sections
Monitoring and evaluationexercises
Policy formulation andimplementation of specialprograms for EWS/LIGsections
Supportive and conduciveenvironment
Public Sector Housing Boards,Development Authorities,Public Agencies, MunicipalCorporations etc.
Provision of land and basicinfrastructure
Focus on EWS/LIG/MIGhousing
Private Sector DevelopersBuildersConstruction Companies
Integrated TownshipDevelopment particularly inmetro and semi-metro areas.Focus on MIG/HIG segments
Individuals/SHGs/NGOs Self Builders sub-contractingCooperative societies
Individual housesCooperative societiesSelf Help Groups
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
11/35
Housing: An agent for Financial Inclusion
11
Housing has direct impact on employment and income generation -An engine for Equitable and Balanced Economic Growth.
Impact in terms of Improved habitat, Living, Educational, Social andCultural standards leading to Human Capital Formation and therebythe future Income capabilities.
Improved productivity leads to enhanced Income, Savings andRepayment potential on sustainable lines.
Sustainable Human Settlement: An Effective tool towards FinancialInclusion with Financial Stability and Social Inclusion
11
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
12/35
Housing Demographics
12
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
13/35
HOUSING FINANCE IN INDIA
13
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
14/35
Evolution & Growth
14
Predominantly comprised of informal sources of credit till the late eighties asthere were very few takers of housing loans and no support for formalizedinstitutions.
In 1988 NHB was established as the promoter, financer and regulator ofhousing finance institutions in India.
Since 1988, number of HFCs have increased in the public as well as theprivate sector.
Commercial Banks, which were initially reluctant to lend, are now intodisbursement of housing loans in a major way.
Low interest rates, rising disposable income, stable property prices and fiscalincentives have made housing finance an attractive proposition.
Increase in market share of Banks from 31% in 2000-01 to over 60% in 2008-09; the growth is mainly attributed to their large network, access to low costdeposits and equity support from Govt. which have helped in offering homeloans at lower rates of interest.
Share of HFCs decreased from 69% in 2000-01 to about 38% in 2008-09.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
15/35
Key Trends
15
Sustained growth in recent years with a CAGR of around 21% during2003-11 supported by a prudent regulatory regime and robustperformance of Banks and specialized HFCs.
Prudent and well-regulated lending practices have helped keep theNPA s comfortably low.
Market segmentation based on borrower profile has helped diversifyrisk.
Significant demand for housing as affordability and accessibility aremajor challenges for the low and moderate income population.
Resultant shift in market focus towards Affordable Housing. Estimated outstanding housing loan as a percentage of GDP has risen
from 3.4% in 2001 to 7.25% in 2007. However, continues to be abysmallylow compared to other countries.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
16/35
Mortgage Debt as a % of GDP
16
54% 57%
40%
34%
17%
7.25% 7%
0%
10%
20%
30%
40%
50%
60%
USA U.K. EuropeanUnion
Malaysia Thailand India China
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
17/35
Demand-Driven Growth
17
Changing borrower demographic profile
Increasing demand for housing backed by risingdisposable income and growing social aspirations for early
home ownership.
Fiscal benefits associated with interest payment on homeloans.
Aggressive and innovative lending practices implementedby PLIs in recent years
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
18/35
Housing Loan Outstanding(Rs./billion)
332 418 492 591705 862 902
1092 12681532 1807
254 328491
8531268
17912310
25782770
3159
3664
586746
983
1444
1973
2653
3212
3670
4038
4691
5471
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*
Total
Banks
HFCs
$ 104 billion
$ 122 billion
$ 71 billion
$ 59 billion
$ 44 billion
$ 32 billion
$ 22 billion
$ 17 billion$ 13 billion
$ 82 billion
$ 90 billion
*Provisional 18
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
19/35
Housing Finance Disbursements
Disbursals (INR in billion )
*Provisional
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11*
126 146 178 209260 274 317
413 484575
712
56 86236
328504 586
700784
843944
1,105
182232
414
537
764
860
1,017
1,197
1,327
1,520
1,817
Total
Banks
HFCs
$ 4 billion$ 5 billion
$ 9 billion
$ 12 billion
$ 17 billion
$ 19 billion
$ 23 billion
$ 27 billion
$ 29 billion
$ 34 billion
$ 40 billion
19
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
20/35
Institutional Hierarchy
20
Kind of Institutions Regulator Target Groups
All India Level Financial
Institutions such as NHB,NABARD
Reserve Bank of India Refinancing Institutions catering to all
segments of the society with particularfocus on EWS/LIG and rural sections.
Banks including Regional RuralBanks, State Co-operative Banksand Foreign Banks
Reserve Bank of India All segments of society in both urbanand rural areas. Initiated major stepstowards linking the informal sectorwith the formal sector..
Housing Finance Companies National Housing Bank Dedicated institutions which lendtowards housing.Catering largely to the middle andhigher income groups particularly inthe urban and semi urban areas, theyhave limited presence and reach inrural areas.
Cooperative sector Institutions State Cooperative Acts Deep presence across the country,particularly in the rural areas, however,has had limited success in lending forhousing due to poor financials.
MicrofinanceInstitutions/NGOs/SHGs
Unregulated(Act to be introduced for
regulating the same)
Recent foray into housing particularlyin respect of home improvement
finance for the poor and lower incomesegments.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
21/35
Governance
21
Housing Finance Companies promoted and regulated by National HousingBank.
Banks regulated and supervised by the Reserve Bank of India.
Cooperative sector institutions adopt norms as defined under the Registrarof Co-operatives Societies registered in each State. Resultantly, suchinstitutions can have varied norms depending upon the State laws etc.
MFIs/NGOs/SHGs are currently unregulated and are guided andgoverned by their respective norms/principles etc.
Regulatory bodies under their respective acts also frame guidelines anddirections on areas such as lending norms, prudential norms, provisioningrequirements, asset quality and capital, asset liability management,customer guidelines, fair practice codes, anti-money launderingrequirements of capital, etc.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
22/35
Products Offered/Terms & Conditions
22
Parameter Banks HFCs Co-operativeSector/MFIs/NGOs
Housing Productoffered
Wide range of products rangingfrom new home loans, homeimprovement loans, land purchaseloans etc.
Products include homeimprovement loans, homeextension loan, short term
bridgeloans, land purchase loan,
homeequity etc
Limited products mainlycatering to
home improvement loans beingintegrated with livelihood
finance.
Average LTV Ratio Maximum 80% Maximum 80% Maximum 75%
Average IIR Maximum 40% Maximum 40% Maximum 35%
Loan Size Average size INR 0.4-0.5 million Average size INR 0.6 million Usually up to INR 0.05 million
Loan Tenure Maximum 20 years Maximum 15 years Maximum 5 years
Interest rates Linked to Base Rates and areusually competitive on account oflow borrowing cost. Both floatingand fixed being offered.
Slightly higher than Bankshowever more competitivethan CSOs/MFIs.Both floating and fixed rates
are offered.
Usually higher than otherinstitutions on account of highercosts.Only fixed rates of interest
offered.
Security/Collateral Mortgage of the property financed Mortgage of the propertyfinanced
Mortgage of the propertyfinanced/Group Guarantee etc
Service charges Maximum 2% Maximum 2% Not available
PrepaymentCharges
Maximum 2% Maximum 2% Not insisted upon
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
23/35
Issues & Challenges
23
The buoyant growth in the housing and housing finance markets in
recent years, has not been inclusive. A majority of India s population, especially the poor and slum
dwellers, not only lack access to housing and housing finance in theformal sector.
In India, about 23.1% of the urban population reside in slums wherethe quality of housing stock and basic amenities like potable water,sanitation, sewerage etc. is extremely poor.
Around 99% of the housing shortage of 24.7 million at the beginningof the 11 th plan period pertains to the EWS and LIG segments.
Initiatives have been taken by the Govt. and formal and informalinstitutions, particularly targeting the neglected segments like theEWS/LIG s etc.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
24/35
INITIATIVES &
POLICY MEASURES
24
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
25/35
Policies & Programs
25
National Urban Housing and Habitat Policy, 2007Implemented by Ministry of Housing and Urban PovertyAlleviationPromote & enhance the role of Government as facilitator andregulatorFocus on habitat with regional planning approachEarmark land for EWS/LIG groupsFocus on governments social housing schemes so as to increaseaffordable housing
Jawaharlal Nehru Urban Renewal ProgramBasic Services to the Urban PoorIntegrated Housing and Slum Development
Indira Awas YojanaCash subsidy scheme for rural BPL families
Impetus on Affordable HousingInterest Subsidy Scheme for Housing the Urban Poor1% Interest Subvention Scheme
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
26/35
Initiatives by Formal Sector
26
Commercial Banks have successfully linked with SHG s for on-lending to their customers.
HFCs have been making continuous and sustainedefforts to reach the low/moderate income groupsparticularly the economically weaker sections.
State Housing Boards and Development Authorities havestrived to play a proactive role in the supply of housingparticularly to the EWS and LIG segments
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
27/35
Informal Sector Scope & Initiatives
27
The role of microfinance institutions , non-governmental
organizations and community based organizations hasremained limited due to challenges such as funding, land title, loan repayments and products.
Offering full scale financial services to the poor is critical to thepromotion of financial inclusion.
In India, the EWS and poor sections depend to a large extent,on informal sources of credit including personalmoneylenders, pawnbrokers, NGO s and community basedMFI s .
Many semi-formal providers of housing finance such asSEWA, SPARC etc. co-operate with or build CBO s to carryout their community work.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
28/35
ROLE OF NHB
28
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
29/35
Genesis and Objective
29
Absence of specialized institutions catering to housing credit needs of thepopulation.
Need for an apex level institution for developing a market-oriented housingfinance system in the country.
NHB Established in 1988 by an Act of Parliament as the Apex Institutionfor the Housing Finance System.
Wholly owned by the Reserve Bank of India.
To operate as a principal agency to promote housing finance institutions bothat local and regional levels and to provide financial and other support
incidental to such institutions and for matters connected therewith shall act on business principles with due regard to public interest.
(National Housing Bank Act, 1987)
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
30/35
Ideology
30
Vision
Promoting Inclusive expansion with stability
in the housing finance market
Mission
To harness and promote the market potentials to serve thehousing needs of all segments of the population with
focus on low and moderate income housing
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
31/35
Aims and Objectives
31
To promote a sound, healthy, viable and efficient housingfinance system to cater to all segments of the population.
To support housing finance institutions through financing andcapacity building measures.
To catalyze flow of funds to all regions and incomes groups.
To develop market infrastructure for sound growth of housing
finance system.
To ensure expansion and stability in the housing finance market.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
32/35
Integrated Approach
32
Mutually synergic roles
Regulation & SupervisionFinancingPromotion & Development
Aimed at confidence-building among Savers, Borrowers, Lenders andInvestors, Policy Makers and International Stakeholders.
Multi-prongedSimultaneous intervention on both the demand (financial) andsupply (real) side of the housing sector.
Multi- InstitutionsFinancing a range of institutions for extensive outreach.
Multiple Products
Vision: Promoting inclusive expansion with stability inhousing finance market
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
33/35
Role of the National Housing Bank
33
Augmenting Resources for the housing sector
Leveraging the liquidity
Support specialized institutions to serve as dedicatedcenters for housing credit
Fill the credit gaps suffered by low income householdsby strengthening linkages between formal and informalsector.
Strengthening linkages between formal and informalsector institutions - Financing MFIs
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
34/35
Summing Up
34
The growth in the Indian Housing Finance Sector in recent years hasnot been inclusive. To ensure success in lending to all segments ofthe society, particularly the low income households, a broad range ofaction on many fronts are required.
SCBs being the largest institutional platform, have to play a vital role
in adopting new approaches and introducing customized andflexible mortgage products in active partnership with State & LocalGovernments and other nonprofit organizations.
The schemes evolved must not only provide an affordable housingloan product but also a complete habitat-based solution.
The Govt. has to forge partnerships with various strategic partners inthe public as well as the private sectors to ensure the vision ofAffordable Housing for All is realized.
8/2/2019 1 Housin Finance Market in India MR.vishal NHB
35/35
THANK YOU