2018年低收入住房金融市场状况（英文版）_44页_7mb

Summary of State of the Low-Income Housing Finance Market 2018

Core Content

This report provides an in-depth analysis of the low-income housing finance market in India, focusing on the growth, challenges, and opportunities for affordable housing finance. It outlines the role of Affordable Housing Finance Companies (AHFCs) in enabling home ownership for low-income urban households, particularly those in the informal sector, and highlights the need for policy and market interventions to further expand access.

Main Points

1. Market Context and Demand

• Rapid urbanization in India has led to a significant shortage of affordable housing, with an estimated 10–12 million urban homes missing and 26–37 million urban households living in informal housing.
• Most of these households are from the Economically Weaker Section (EWS) and Low Income Group (LIG), with annual incomes below ₹6 lakhs ($9,200).
• These households often lack formal income documentation, making it difficult for traditional banks and housing finance companies to assess their creditworthiness.

2. Role of AHFCs

• AHFCs have emerged as a key player in addressing this gap by using field-based credit assessment to evaluate informal sector customers.
• These companies focus on self-constructed homes and small apartment buildings, often in semi-urban and peripheral urban areas.
• By 2017, AHFCs had a combined loan book of over ₹27,000 crores ($4.1 billion), enabling the ownership of more than 230,000 affordable homes.

3. Market Growth and Characteristics

• AHFCs have grown significantly since 2013, expanding both geographically and in terms of customer base.
• The average loan size is ₹9.3 lakhs ($14,350), with loan tenures ranging from 7–20 years and EMIs typically 30–40% of monthly income.
• Loan-to-value (LTV) ratios are generally lower than those of traditional housing finance, ranging from 5–20% of construction costs, depending on the type of housing.

4. Challenges

• High NPA rates: Informal customers have higher income variability, leading to higher NPAs (up to 5% in some cases).
• Balance transfers: Larger banks and HFCs are taking over customers with good repayment histories, reducing AHFCs' profitability and loan book quality.
• Subsidy limitations: The Credit-Linked Subsidy (CLS) under PMAY is not effective in improving affordability because it is applied after the loan is disbursed.
• Legal and regulatory issues: Some states have laws that restrict slum improvement, and AHFCs face difficulties in repossession and recovery.

5. Opportunities

• Expanding subsidy reach: Including more semi-urban areas in CLS eligibility and improving the process for pre-approval could increase affordability.
• Slum home improvement: Providing loans for home extension and improvement in slums can improve living conditions, with 14 million urban households living in slums.
• Beneficiary-led construction: Supporting EWS households who own land but lack pucca housing can help them improve their living conditions.
• Encouraging small developers: AHFCs can help small developers by providing refinance and working capital for construction finance.

6. Recommendations

• Improve affordability: Implement pre-approval processes for CLS and reduce costs like GST, stamp duty, and mortgage registration fees.
• Expand market coverage: Support AHFCs in reaching new customer segments, including slum dwellers and semi-urban areas.
• Foster a healthy market: Introduce fees for balance transfers, provide incentives for CLS, and allow AHFCs to use tax exemptions to reduce prices.
• Support small developers: Provide refinance and working capital to help them expand affordable housing supply.

Key Information

• AHFCs have been pivotal in developing a market for low-income informal customers.
• Self-construction is the dominant form of affordable housing, with AHFCs playing a key role in financing it.
• PMAY is a major government initiative aimed at providing 20 million affordable homes, with AHFCs contributing significantly to its goals.
• Field-based credit assessment is a critical innovation enabling AHFCs to serve informal sector customers.
• NHB has been a key supporter of the AHFC sector, providing licenses and refinance.
• Legal and regulatory hurdles remain a challenge for expanding home improvement and construction finance in slums.

Conclusion

The low-income housing finance market in India has made significant strides since 2006, with AHFCs leading the charge in providing affordable housing to millions of informal sector customers. However, challenges such as high NPAs, limited subsidy reach, and regulatory constraints remain. With targeted policy support and market expansion, the sector has the potential to grow further and improve the lives of the urban working poor.