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Govt plans to shore up HUDCO in bid to boost housing finance

The urban affairs and employment ministry has embarked on a major plan for expansion of housing finances to meet the growing demand of the housing sector in the country.

The Ninth Plan working group on urban housing has estimated flow of finance for urban housing from formal institutions to the order of Rs 340 billion during the plan period. The actual flow of finance from the formal sector in housing is being monitored by the standing committee of the Planning Commission.

Official sources today said the measures being considered were: enhanced equity support to the Housing and Urban Development Corporation by increasing its authorised capital to the extent of Ninth Plan provision and subscription to the equity as per the budget provision during 1998-99; assistance to HUDCO in obtaining soft loans and grants from bilateral and multi-lateral agencies like the Overseas Economic Cooperation Funds of Japan, Asian Development Bank, World Bank and KFW of Germany for housing and urban development programmes.

The HUDCO would also be supported in its market borrowing programme, particularly through taxable and tax-free bonds and government guaranteed debentures, according to the memorandum of understanding entered into with the urban affairs ministry.

The sources said the ministry had also taken up the issue of flow of finance to the housing sector with the commercial banks, provident fund organisations and pension funds and asked them to make larger investment in housing.

The necessity of diverting funds from other sectors which were now attracting private investments was also being explored. Besides, the National Housing Bank (nhb) was being persuaded to revitalise its home loan account scheme by providing better returns to investors.

Steps were being taken to identify the constraints and action taken for increasing the resource flow as per the projections made by the working group for the Ninth Plan. There had been a steep fall in the investment made in the housing sector by the commercial banks and the Life Insurance Corporation.

Larger Non Resident Indian investment was being sought in housing and real estate. State governments are being advised to encourage the builders and developers to undertake such schemes by providing land and other facilities through the single window clearance system.

Besides, the activities of housing cooperatives were being promoted by persuading state agencies to allot developed land to the housing cooperatives.

UNI

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