Housing Finance Services


Of late, housing finance has not only become popular, but the procedure for obtaining a loan has become so simplified that housing loans are easily available. This may be attributed to the change in the housing policy of both the Central and State governments. A redeeming feature of Indian housing finance is the recent entry of commercial banks in a big way. In fact, State Bank of India has set up a separate subsidiary for housing finance called ‘SBI Home Finance’. Similarly the Canara Bank has set up a separate housing finance company. HUDCO provides refinance facility to the State Governments and also to financial institutions involved in housing finance. World Bank is providing soft loans, repayable in 25 to 40 years, for the purpose of slum clearance. Housing development is an important policy of the World Bank, and provides huge amount of funds in many underdeveloped countries.

Housing and land development occupy a peculiar position in India so far as the State and Central governments are concerned. Both the governments have the power to make enactments on the subject of housing and land. As a result, the housing policy in India has been wide and varied. The Central government has adopted a five year planning strategy through which it makes some fiscal concessions for housing. State governments have the power to legislate and have their own sources as specified in the National Housing and Habitat Policy (1998). Further, land development agencies can borrow from housing and land development agencies operating throughout the country. However, some broad commonalities exist in the laws, institutions and policy adopted.


According to the Longman dictionary of Contemporary English, “Housing means the houses or conditions that people live in. The related terms are housing association housing estate and housing projects. An association formed by a group of people so that they can build homes for themselves, or buy houses for themselves or buy houses of their own is called ‘housing association”. A large number of houses that have been built together in a planned way is called ‘housing estate’. A group of houses or apartments, usually built with government money for poor families is called ‘housing projects’.

Housing Finance:

A set of all financial arrangements that are made available by Housing Finance Companies (HFCs) to meet the requirements of housing is called ‘housing finance’.

Models of Housing Projects:

Land and housing development are carried out in various ways in different cities in India. Whilst there are a few laws which are applicable for the entire country, there are many laws, which are applicable in the respective states only. However, the laws in various states are more or less similar, with small variations. As an obvious outcome, the institutional framework and the process of land and housing development are also more or less similar in various states. The popular models of land and housing developments are as follows:

Town Planning:

Most of the town planning schemes are developed in the early part of the 20th century after the enactment of the Bombay Town Planning Act, in 1915. Town planning schemes are found in many parts of the country. The town planning department prepares a scheme for the improvement of a certain area, which includes land owned by various landowners. The schemes comprises of earmarking of roads, open spaces, civic amenities and some social facilities. Some of the prime and most developed areas of cities like Bombay, Ahmedabad, Bangalore, and Chennai were developed under these schemes.

Development Authority Projects:

Most of the development authorities have citywide jurisdiction while a few have it statewide. Development Authorities implement projects in accordance with the master plan for the city. They usually get the land acquired through the Central Land acquisition Act (CLDAA) of 1984 and then develop the lands. These projects are usually funded through national funding agencies like the National Housing Bank (NHB) or the Housing and Urban Development Corporation (HUDCO). Sometimes, the World Bank also funds projects. The development authorities execute various development projects like housing projects, industrial estates, markets, parks, shopping complexes, etc. The plots or apartments are allotted to people and the costs are recovered over a period of time. The entire project, after completion, is handed over to the local body for civic maintenance.

Housing Board Projects:

Housing boards are state level organizations whose main objective is to develop housing. This is done by acquiring land and then executing the project on a “No Profit No Loss’ basis with funds obtained from funding agencies or from purchasers themselves.

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