Financing of Projects | Economics related to Building Industry

Financing of Projects is the most important factor determining the success of the project. Various
factors influence the success of a project.

Here are the four factors:

1. Sources
2. Total Cost Estimation of the Project
3. Utility in Financing
4. Agencies and Institutions directly and indirectly influencing the economic aspects of a
project

Sources

Loans are available for both purchasers and Builders from:

All Nationalized Banks,

Co-operative Banks,

Private Banks,

LIC HFL,(Housing Finance Limited)

Finance Companies,

Insurance Companies like General Insurance Co (GIC), United India Insurance Co Ltd, National
Insurance Co Ltd, Oriental Insurance Co Ltd, New India Assurance Co Ltd (for the employees),
Foreign Direct Investment FDI, 20 Nationalised Banks along with Regional Rural Banks come
under Public sector.

Commercial Banks, Cooperative Banks operate under provisions of Cooperative societies Law of
states – for credit and non-credit purpose.

National Bank of Agriculture and Rural Development (NABARD) help Farming sector.

Total Cost Estimation of the Project

A house should be built based on an estimated cost. If the building cost increases, it will be a loss
and if it can be reduced, it will be a saving for the individual as well as for the company as a
whole.
Utility in Financing

Proper utility of the available financial resources in a planned manner will result in the success of
the projects. Any improper planning, lack of technical expertise, under utility of technology and
expertise will result in the losses of the project as well as loss to the resources of the Nation as a
whole.

Agencies and Institutions directly and indirectly influencing the economic aspects of a
project

Interest rates by banks, availability of materials (products, producers of materials), Governmental

agencies, both central and state policies in making finances available for loans, personal savings,
demand and supply, Population (Growing in India and decrease in some western countries).

Economic stability of the country, Global Economy, Location of the projects, Inflation or
Deflation. All the agencies those advance Housing loans like Specialised Financing agencies like
(HUDCO) Housing and Urban Development Corporation, HDFC, National Housing Bank
(NHB). More than 90% of the dwelling units are financed by (HUDCO) for economically
weaker sections and Low Income Group.