‘Low Cost Long-term Fund Is The Biggest Challenge'

National Housing Bank (NHB) is the agency that handles all issues related to finance for the Housing for All mission. On the third anniversary of this mission, BW Businessworld caught up with Sriram Kalyanaraman, MD & CEO of NHB, to get a perspective on the mission. Excerpts of the interview:

Basic and systematic infrastructure is the first step in realising the larger vision of Housing for All. How do you define it in financial terms?

Under the Smart Cities Mission, 100 cities across the country have been selected with a total project cost of Rs 2.03 lakh crore ($31 billion), with nearly 10 crore urban population being impacted. Further, the Swachh Bharat Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and Heritage City Development and Augmentation Yojana (HRIDAY) will help address some of the major infrastructure issues affecting the urban landscape. Development of transportation infrastructure like Metro rail in many cities is also helping in houses coming up a little away from the industrial hubs as commuting becomes easier and comfortable. This is basic infra development.

What are your views on housing finance?

The housing sector in the country is heading for a higher growth trajectory. With the grant of infrastructure status to affordable housing and the implementation of RERA and GST to bring in more transparency to the sector, we foresee a higher intent to buy a house, which would spur the demand for home loans since the affordable segment is quite underserved. .

NHB has reduced the risk weightage for individual housing loans given by housing finance companies (HFC) thereby increasing the funds available with them to lend. This move will also reduce the gap in the cost of funds to HFCs vis-à-vis banks. To make available more funds to HFCs, NHB has come out with two measures: It has rationalised the risk-weightage of some categories of loans and, two, allowed HFCs to calculate the risk weightage on the basis of outstanding loans instead of the loan amount initially lent. As a result, 75 percent of the new accounts booked for individual housing loans in FY2017-18 were under Rs 25 Lakh.