With a large proportion of the population living under the poverty line, the provision of affordable and accessible housing is essential in India. This also means that the availability of differentiated lines of financial products is necessary not only for home purchase, but also for the improvement and repair of existing homes.
India’s National Housing Bank (NHB) enable lending institutions to mitigate their asset-liability mismatch risk, which is usually a major barrier to accessing finance for low-income populations. NHB has an Affordable Housing Fund, which leverages their resources and capacity in loaning specifically to low-income households, along with special refinancing for urban low-income housing. This refinancing provides a fixed interest rate for ten to fifteen years, and funds can be used for many uses, ranging from new unit construction to the renovation and upgrading of existing units. NHB administers the Prime Minister’s Housing Program (PMAY), which provides concessional funding to low-income groups, as well as the Credit Risk Guarantee Trust Fund for Low-Income Housing, which mitigates credit risk, encouraging banks to expand their lending to informal and low-income borrowers.
Source:
McAllister, P. & Rozas, D. (2020) Taking Shelter: Housing Finance for the World’s Poor. Practical Action Publishing.