Professional Documents
Culture Documents
A. Housing Shortage
• India is a vast country with a population of over 1 billion
people. More than 50 million people are living in slums.
• India has a current housing shortage of 22 million units
(both in rural and urban areas). It will increase to 42
million by the end of 9th five-year plan.
• Rural areas are still neglected, both under infrastructure
and housing, resulting in shift towards urban centres.
• India is far behind Asian Countries such as Singapore,
Hongkong, Malaysia, Bangkok, Korea and China in
fulfilling this basic human need.
Housing Loan Market in India
Benefits of Securitisation:
• It is an alternative source of funding.
• The asset is transferred and It generates cash without
any addition to borrowings, thus pressure on capital
adequacy is averted.
State of Securitisation in India and
related problems:
• The route for securitisation was cleared with the amendment in
the National Housing Finance (Amendment) Act, 2000. The
NHB was allowed to act as a Special Purpose Vehicle to handle
securitisation. NHB has already handled two/three issues.
• The high stamp duty in most of states on bonds with the
exception of Maharashtra, Karnataka Gujrat, Tamil Nadu and
West Bengal, where the stamp is 0.1% is an obstacle.
• A high incidence of stamp duty makes the issue un-attractive
and costly for the originator.
• The Companies have availed refinance from NHB and book
debts are charged to it. If a Housing Finance Company wants
to securitise these loans, NHB should accept pre-payment and
release these securities.
• NHB has imposed prepayment charges on Refinance availed @
1% on the amount for the remaining period of loan outstanding,
which works out to more than 4% on the outstanding amount. If
securitisation is to be successful, NHB should reconsider the
levy of charges.