'Banks must be allowed to fund developers for land acquisition'

The affordable housing segment has missed out on the housing boom that the country has been witnessing in recent years, says DEEPAK PAREKH, chairman of HDFC Life Insurance and HDFC Asset Management Company.

In a Fireside chat with Business Standard's consulting editor, Tamal Bandyopadhyay, Parekh says there's a need to provide builders with an impetus to launch projects in the affordable housing space, along with allowing bank credit for land acquisition, albeit with some conditions. The veteran finance czar said such a move would help bring down the cost of housing. Edited excerpts: The Maharashtra government reached out to you in the early post-Covid period to revive the real estate sector. A committee headed by you came out with a plan to cut stamp duty and raise the FSI (floor space index), among other measures. This led to a revival in the housing market in Mumbai and Maharashtra. Other states replicated the model. Take us through these measures...

The decrease in stamp duty and increase in FSI was a one-time exercise to kick-start the housing sector, which was in the doldrums. There was latent demand but people were reluctant to buy. These measures gave an impetus as a time limit was attached to them.

The developers got enthused to take on more projects and people started buying fast to save money on stamp duty. I don't think any time in the past, the housing market was as buoyant as it is today. In the top 6-7 cities itself, 500,000 residential units were sold in 2023.

The number is 30 per cent higher than the previous year. This does not include (individual) houses built on land. 15 percent of the 500,000 residential units were sold in the Mumbai Metropolitan region itself. There was a surge in new projects across the country, except for the north, where we saw a sharp decline in inventory.