Monday, 1 July 2013

A Study on Development of housing loan in the banking industry

A Study on Development of housing loan in the banking industry

Shelter is basic necessity of life, ranked behind food and clothing. Fro most people buying a house are a cherished dream. a home is one is one of the assets whose value
Appreciates over the years and thereby is the safest investment. The biggest investment most people would make will be in a home. in addition, the deduction that are available on the purchases of a home .in addition, the tax deduction that are  available on the purchases of a home  are an added advantage .Buying a home works out cheaper  in the long run  .

With the frerce competition in the housing sector, there is a strong urge in every individual life, whether rich or poor, to own a home. House is not place of dwelling alone it also satisfies an individual’s social and psychological needs. House by itself is not productive asset but investment in housing help in increasing productivity provision of shelter, thus is closely linked with a county’s overall socio-economic development    

 It was in recognition of the mutually supportive  roles of shelter and development in the mid-eighties  following  declaration of 1987 as the international year of shelter for  the home less concerted  efforts were made in our country to formation a comprehensive  nation housing policy ,encompassing all the elements relevant to shelter development . The most significant measure taken was to establish Nation Housing Banking (NHB) ON JULY 9,1988 under the apex agency to promote housing finance institutions to mobilize resources for the housing sector, to provide financial ,technical , administrative assistance to housing finance institutions’  as also to regulate  their working and to coordinate with all the agencies with housing.

Housing Finance and banking industry
Housing finance overview
            Housing is a significant engine for growth and development of the economy.The growth in housing and finanace activities in recent years reflect the buyant state of the housing finanace market in the country.the multiplier effect of investment in housing has grown over the past years as the prpotion of outstanding housing loans as percentage of GDP increased from 3.4 percent in 2001 to 7.25 per cent by 2005.this is quite indicative of the potential that exists if the proportion of investment in housing in other developed and emerging economies is considered.

Housing constitutes an important and a measure of the socio-economic status of people. It is regarded as a critical sector in terms of policy initiatives and interventions. This is reflected in the efforts of the government to improve housing and habitat conditions by the way of financial allocations in the five year plans and fiscal measures related to housing announced in the union budgets. The reach of the institutional financial market has been extended to serve the housing sector in different regions and different segment of the population. the accessibility of housing finance for people in general has evolved ,developed and improved over the years. The financing institutions have come to see good value in funding this component of the economy. with a growing number of players and increased Competetion,the housing sector is becoming increasingly market-driven.the sector offers safe and secure residential assets, good business opportunities for the lending agencies and attractive terms for the borrowers.Overall,the affordability of housing loans clearly appears to have improved with fast growing number of borrowers.
This has also partly resulted from higher levels of disposable income seen among the earners. While the borrower’s community has thronged the sector, the market has also witnessed change in lending practices in certain segments to accommodate customer needs, as an offshoot of increased competition and a buyers market. There is a felt need for standardization and uniformity in practices in order to improve transparency in the market and bring the greater efficiency.

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