INTRODUCTION
Home is the most
important human need, next only to food, clothing and shelter. Home is an
important facet of economic development; it is a basic need of a human being.
It is a place where everyone can relax after returning home from day’s tiring
work. It is a place where everyone can give time to his/her family and spend
beautiful moments with family members. It is a fundamental demand for living
and one of the keys to peace and happiness. Every creature yearns for a home.It
constitutes a very significant part of the social and physical environment
where the individuals grow and mature as good citizens. It also plays an
important role in creating employment, maintaining health, social stability and
preserving decent human life.
Housing Finance
plays a vital role as an engine of equitable economic growth through the
reduction of poverty and prevents slum proliferation in economy. The demand for
housing has increased rapidly day by day. Therefore, to meet with the growing
housing demand is the aim of the government. To achieve this aim it is required
to provide the finance for housing to the people. The liberalization of the
financial sector of the economy has also become possible by the housing
finance. Home Loan is the funds buyer has to borrow usually from a bank or
other financial institutions to purchase a property, generally secured, by a
registered mortgage to the bank over the property being purchased. A mortgage
loan is a debt owed on a home, the mortgage rate is the interest rate charged
to the home owner for the use of the loan.
Housing Finance
is linked with the provision of infrastructure and utilities because it has a
clear relationship with the volume of new stock which will be built. As mentioned
earlier, housing finance plays an intermediary role between production
consumption economy and housing system. Through change in polices in the
capital market can be expanded so that a part of the resources flow into
housing. Thus, housing finance is an important link in the potential for
transforming the creation of housing and social urban investment into strips of
property and benefit for the people including low income groups. How the flow
of resource helps the wider range of income groups will depend upon the terms
and conditions built into the design of housing credit. Generally, housing
requires longer term finance than the one in industry.
MARKET
TREND
In India, the
government provisions account for a very small portion of housing activities
(i.e.) less than 5% of total housing each year. Thus, the private sector seems
to be dominant. However, the public polices often ignored the private sector
and so it supply cannot match housing demands.
India is
considered as the birthplace of the number zero. Home to roughly 1.2 billion
people, India is the second most populous country after China and is expected
to overtake it by 2030. About one in every sixth person breathing on earth
lives in India, and the growth rate of the population is still high. The
following table 1.1 gives the information about the share of home mortgage in
GDP of different countries:
Table 1.1 Home Mortgage
as a Percentage of GDP Country
Home Mortgage Percentage of GDP
|
India 5%
|
Korea 14%
|
|
Thailand 18%
|
Malaysia 23%
|
|
Taiwan 37%
|
Hong Kong 60%
|
|
Germany 52%
|
Singapore 68%
|
|
USA 86%
|
UK 72%
|
|
Demark 90%
|
|
Source: www.economywatch.com
It could be seen from the above
table that in spite of the merits highlighted in the preceding paragraphs, in
house mortgage, as a percentage of GDP, India stands the lowest. Amongst the
Asian countries, Hong Kong is the topper, followed by Taiwan, Malaysia,
Thailand and Korea.
Housing Finance
in India
The Housing finance sector in
India has no doubt, experienced unprecedented change in its structure from its
formulation stage. Indian Housing Finance has far moved from the stage of being
a solely government undertaking provided service during the 1970’s to a very
competitive sector with more than 45 housing finance entities providing housing
loans worth `
7,81,000
million to home buyers across India.
On examination of the above data,
it is found that in the case of housing loan accounts the SBI, Nationalized
Banks, Foreign Banks and all Scheduled Commercial Banks had registered increase
of 50 to 58% whereas the Regional Rural Banks had growth rate of about 32%,
while the private sector banks achieved increase of 65.7%. Thus, the private sector
banks have been able to achieve the maximum growth in the number of housing
loan accounts. Analyzing the data on total Sanction Limits it is found that the
foreign bank had registered the highest growth (169.4%), while for other types
of banks the increase was between 124% to 139%. In this case also regional rural
banks could achieve only 62% growth.
