Housing finance

INNOVATIVE Chapter 8
FINANCIAL SERVICES
CENTRAL GOVERNMENT /
BUDGETARY ALLOCATION
Housing has been classified as a basic and India and successive governments has
highlighted its priority status. The central government has introduced various
housing schemes and formulates the housing policies from time to time and provide
necessary advisory and render financial assistance in the form of subsidies and
loans to state government and union territories.
INSTITUTIONAL SOURCES/ FORMAL
HOUSING FINANCE SYSTEM:
Housing industry consist of organizes and unorganized sector. Organized sector is
governed by National Housing bank (NHB), a subsidiary of RBI. The major
financial institutions, which finance sector may be classified into 2 broad categories
depending upon whether housing finance in their
A. Primary Function
B. Secondary function
A. PRIMARY FUNCTION:
Specialised housing finance institutions have been set up with the sole purpose of
financing house construction or purchase activities.
Example:
1. The Housing and urban Development Corporation (HUDCO)
2. Housing Development and finance corporation Ltd (HDFC)
3. National housing Bank (NHB)
4. PNB Housing finance Ltd
5. ICICI have finance company ltd.
B. SECONDARY FUNCTION
Non- specialize housing finance institutions provide housing finance like
commercial banks. The Reserve bank of India initial efforts to encourage
commercial banks in housing finance came in the form of direct credit. Bank lending
under housing comprises 3 components:
1. Direct lending which entails banks themselves extending housing finance loan.
2. indirect lending where banks lend to approved housing finance companies
3. Investments in mortgage backed securities underlying loans securitized by
housing finance companies.
 HOUSING FINANCE AGENCIES
Housing finance industry has grown significantly in India . The growth of the real estate in India has witnessed at
an exponential rate over last five years with the content rise in demand for industrial and commercial complexes.
Some of the top housing finance companies are:
1. HDFC: Housing Development Finance Corporation Limited (HDFC) is an Indian financial services
 company based in Mumbai, India.
It was founded in 1977, as the first specialized mortgage company in India. HDFC was promoted by the Industrial
Credit and Investment Corporation of India (ICICI).
It offers financial assistance for individual for housing purpose like:
1. Buying or construction of houses
2. Extension or improvement of existing house
3. Independent bungalow
4. Acquiring self – contained flat.
2. ICICI home Finance company ltd. (ICICI HFC): ICICI Home Finance Company Limited (ICICI HFC) is a
Housing Finance Company regulated by Reserve Bank of India (RBI) and is a wholly-owned subsidiary of ICICI
Bank Ltd. Formed in 1999. it provides various type of loans for its customers for a tenure upto 20 years
 TOP HOUSING FINANCE
COMPANIES
3. IDBI Housing Finance Ltd (IHFL):it was formed in 2000. it offers a range of housing financial solutions to its
customers, including individual housing loan, housing improvement, home extension loan, home Loan for NRI, plot loan
and loan against home.
4. State bank of India home Finance ltd: SBI home finance is the largest mortgages lender in India . SBI Home Finance
ltd was incorporated in 1987 as a private ltd company. It provides loans to all kids of individuals who match the relevant
eligibility criteria including rural customers under different products designed specifically for different criteria including
rural customers
5. Housing urban development corporation (HUDCO): incorporated in 1970 with special emphasis on low cost
housing . It also carryout development of new township and their infrastructural needs. Through its Niwas scheme it
offers housing loans for buying construction housing /flats. Loans are also offered for renovation/ extension/ alteration of
existing flat/ houses.
6. LIC Housing Finance Ltd: incorporated in 1989 it is another major player in housing finance sector of India. Is
promoted by LIC.
7. PNB Housing Finance Ltd: it offers a wide range of loans for purchase / construction of property to resident Indian as
well as NRI’s. it also provide loan for repair and renovation
8. GIC Housing Finance Ltd: it was promoted by general insurance corporation of India it offers extensive range of
housing finance solution of its customers through wide network