INCLUSIVE HOUSING--HOUSING MICRO FINANCE

Housing is not only a basic necessity but also an indicator of progress of the nation in terms of human development.All over the world housing is regarded as a means of long term wealth accumulation and financial security.Home ownership which is a matter of personal accomplishment can be the primary source of wealth for the people belonging to low and middle income groups.
According to NHB estimates additional housing requirements during the eleventh plan 2007-2012 are 45 million of which 38 million as additional units and seven million as backlog.Investment requirement for housing during eleventh plan will be Rs 10 lakh crores i.e Rs 2lakh crores per year.
The growthn of housing finance in India so far has been value-driven and not volume -driven.Loans of Rs 5 lakhs and above have increased significantly while loans below Rs 5 lakhs registered minimum growth.This reflects increased property prices.The coverage of housing finance system has by and large remained confined to metropolitan and urban areas as well as to high income and middle income groups thereby by-passing the lower income groups,rural poor and urban poor.In spite of significant growth in the housing finance market there still remains a huge gap in housing requirements of the poor and deprived sections of society.Share of rural housing has remained stagnant at 10.3 percent while share of metropolitan areasincreased significantly from 37.8 percent to 47.3 percent during the last 5 years.
The challenge before the nation is to arrange,facilitate catalyse,and manage required resources for investment in housing focussing on lower income categories and the urban and rural poor.The stress must therefore be on more and more inclusiveness and on building a market based inclusive,sustainable housing finance system.An inclusive housing finance system alone can tackle the problem of homelessness on the part of poorer sections of society.
Herein comes the importance of housing micro fianace.Micro finance can be a tool which can be effective in bringing about financial inclusion and in achieving affordable housing for all as laid down in the Nationalurban housing and habitat policy 2007.
Micro housing credit can be defined as an extension of micro finance to the poor for the purpose of fulfilling their housing needs .The key features of housing micro finance are-
quantum of Loan-The amount of loan will be 2to 4 times larger than the average micro credit loans.
Loan Period-2to 5years for home improvementand upto 10 years for house construction.
Credit Delivery-Loan is disbursed to individual borrower
Security for the loan-The property can be mortgaged if clear title and title deeds are available.Otherwise it will be a clean loan.Other forms of security like group guarantee,savings etc may be insisted upon.
Target Group-Poor people with means of repayment like artisans,rural entrepreneurs,craftsmenagricultural labourers rural hoteliers.people engaged in rural non-farm activities people engaged in rural services etc
Other features-Sometimes a productive loan is also offered to increase repayment capacity of the party under PHIRA scheme.
The issues involved in micro housing finance among others are viability of micro housing loans for banks and HFCs,non-availability of proper title deeds,in respect of property to be financed difficulty in getting group gurantee and other collaterals etc.These issues and risks acn be addressed to a great extent by adopting appropriate credit appraisal mechanism and proper selection of borrowers,capacity building among borrowers,by lending for productive purposes as a part and parcel of housing loan.Micro insurance may also be of some help in addressing these issues.It is necessary to ensure satisfactory corporate governance in micro finance institutions.Flexible funding mechanism is necessary.There is also need for co-ordination between formal credit institutions to prevent excess geographical concentration and to develop housing micro finance as a standardised product.