Cabinet may give nod to affordable housing fund

The Union Cabinet in its meeting to be held on Wednesday, is likely to approve Rs 1,000 crore programme to facilitate home loans to approximately 2.5 crore lower income groups across the country.

Mortgage Risk Guarantee Fund was announced in this year’s Budget. The fund will be administered by National Housing Bank (NHB), the apex level financial institution that regulates and supervises the Housing Finance Companies (HFCs), and also provides refinance to commercial banks and HFCs with respect to home loans extended by them.

Once the fund becomes operational, banks and HFCs will be encouraged to give home loans up to Rs 5 lakh to the low income segment without third party guarantee and, without the fear of loans turning bad.

“The Cabinet is scheduled to meet Wednesday. NHB's proposal is part of the agenda,” a government official said on conditions of anonymity.

There is a housing deficit of about 2.5 crore for the economically weak and lower-income groups which is growing at the rate of about 3.6 lakh per annum, according to the Ministry of Housing and Urban Poverty alleviation.

To be floated jointly by the Centre and state governments, the fund is expected to act as a catalyst to bridge the gap between supply and demand of affordable housing, and make it possible for those at the bottom of the pyramid to own a house

But, analysts are of the view that the Congress is leaving no stone unturned to please its voters ahead of the Assembly elections in five states of Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa.