Lending to low income households can be doubled: NHB Report

Credit institutions have a scope to double their lending to low income households as there is a housing shortage in this segment of the society, says a report by National Housing Bank (NHB).
"There is a scope for formal credit institution to approximately double its market presence in lending low income households. The required home loan size for low income house households would be in the range of Rs 50,000-200,000," said the report titled 'Scaling up Housing Micro-Finance'.
The study was conducted by IFMR Capital in partnership with NHB and Department for International Development (DFID).
It suggested a model of self-self help group-bank (SHG- Bank) or self help group-housing finance company (SHG-HFC) linkage product can be used to scale up access to housing finance for lower income and informal households.

"The findings and suggested processes from the report can be used by banks to evaluate NGO-MFIs to build partnerships for SHG Bank linkage. Based on the agreed framework, the NHB can, together with bank, initiate a dependable funding channel," the report said.
The report also found that requirement of home improvement loan would be more than that of the home loan requirement for this segment. The affordable EMI for low income households would be around Rs 1,000, it added.

The study, which was conducted in three phases, selected areas from Tamil Nadu, Uttarakhand, Odisha, Madhya Pradesh, Bihar, Uttar Pradesh, Rajasthan and Maharasthra.

It has also suggested that NHB can start working with a small number of NGO-MFIs to being with.
According to Working Group on Rural Housing for the 12th Five Year Plan (2012-17), the estimated total housing shortage in rural areas is 43.67 million units.