Govt to De-risk Home Loans to Poor

Monday, January 10, 2011

New Delhi The government is in the process of setting up a mortgage guarantee fund which will cover the risk of home loans given to the poor by banks and housing finance companies, Minister of Housing and Urban Poverty Alleviation Kumari Selja said.

“Housing finance companies (HFCs) and banks hesitate to serve the low-income market for a variety of reasons such as inability to assess credit worthiness, uncertain cash flows and lower profits,” she said while addressing the national convention of the National Real Estate Development Council.

Noting that involvement of banks and HFCs is essential to bridge the huge housing deficit, Selja said the ministry is planning to set up a guarantee fund for removing the fears of banks and HFCs in providing loans to the economically weaker sections (EWS) and the low income groups (LIG) of the society.

“My ministry is in the process of innovating and recommending appropriate risk mitigating instruments to allay the fears of banks/HFCs in extending long term home loans to the poor,” she said.

Selja expected that with a hedge fund to cover risk in title instruments, more financial institutions would come forward and would foster the goal of inclusive growth of the downtrodden sections of the society.

Source: Express India (link opens in a new window)