By Mark Smulian | 15 August 2013
India has signed a $100m credit agreement with the World Bank for a programme designed to help low-income households secure loans to buy, build or upgrade their homes.
The Low Income Housing Finance Project will be implemented by the country’s National Housing Bank.
India’s urban population is expanding fast and is expected to reach 600m by 2031, more than double the 2001 level, the World Bank said. The country also faces a housing shortage estimated to total 19m homes last year.
Nilaya Mitash, joint secretary at the Department of Economic Affairs in the Ministry of Finance, said the new scheme would allow the NHB to create mortgages and other financial products that would improve access to housing of low-income households.
NHB chair RV Verma added the project would ‘explore sustainable housing finance models for low-income households’ by increasing the capacity of financial institutions to offer loans to this group.
World Bank operations advisor Michael Haney said some 10m people moved into urban areas each year and needed homes.
However, these low-income earners face barriers to accessing finance at present due to the fact that most work in the informal sector with no documentation of income, Haney said.
‘A majority of these are low-income, informal sector workers who find themselves shut out of formal financial markets when they go seeking loans to build or buy themselves houses,’ he said.
‘They are forced to use unregulated, informal sources of finance at much higher rates of interest. This project will allow low-income households to switch from informal finance to longer-term, formal sources for their housing needs.’
