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Chapter – 10

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					 Financial
Institutions
Chapter Outline
    Introduction
    Housing Finance in India
    Housing Policy
     Housing Financial Services
    Types of Home Loans




Chapter -10        Merchant Banking & Financial Services
Housing Vs Retail Lending
    Housing is one of the basic human needs of the
     society. It is closely linked with the process of
     overall socio-economic development of a country.

    The retail lending business is growing at an
     outstanding rate of over 30% every year. Banks in
     India have gone a long way since 1990s where
     the retail portfolio was less than 5% to the current
     level of around 18%. The proportion of the retail
     share in the lending portfolio is slated to close in
     at around 40% by 2005-2006.

Chapter -10           Merchant Banking & Financial Services
Reasons for lending housing loan
•    Poor credit off take of companies, commercial and other traditionally industrial sector.
•    Growing risk of lending to industry on account of recession.
•    Growing financial disintermediation process enabling many triple A rated companies to
     access the market directly.
•    Relatively less risk for retail borrowers.
•    Rising disposable income and changing life style aspiration of a sizable section of the
     Population.
•    Continuous softening of lending rates which has improved the borrowers’ ability to repay.
•     Increased governmental incentives by way of tax relief or concessions on certain types of
     Loans.
•    Improved liquidity with banks following a reduction in Cash Reserve Ratio (CRR) and low
     credit off take in the face of continued accretion of deposits.
•    Availability of better spread to banks.
•    Widespread of risk among large number of borrowers and
•    Developments in technology which have reduced transaction costs on a large number of
     borrower accounts.




Chapter -10                         Merchant Banking & Financial Services
Housing Finance organisations




Chapter -10   Merchant Banking & Financial Services
Housing Finance Institutions
 The Housing Finance Institutions can be
  segregated into three categories:
• Public Sector Finance
• Banks
• Private Sector Finance




Chapter -10     Merchant Banking & Financial Services
Public Sector Institutions
    HUDCO (Housing and Urban Development Corporation
     Limited)
    LICHFL (Life Insurance Corporation Housing Finance
     Limited)
    GICHFL (General Insurance Corporation Housing Finance
     Limited)
    PNBHFL (Punjab National Bank Housing Finance Limited)
    SBIHF (State Bank of India Housing Finance)
    The other major players in the public sector are the Indian
     Housing, Corp bank Homes, Cent Bank Home Finance
     Limited, etc.



Chapter -10               Merchant Banking & Financial Services
Private Sector Finance
    HDFC (Housing Development Finance Corporation)
    DHFCL (Dewan Housing Finance Corporation Limited)
    GHFCL (Global Housing Finance Corporation Limited)
    BHFL (Birla Home Finance Limited)
    Maharishi Housing
    Others
     Other key housing finance providers in the private sector are
     Sundaram Home Finance, Hometrust Housing, Grihaa
     Finance, Weizmann Homes, GLFL Housing, etc.




Chapter -10               Merchant Banking & Financial Services
National Housing Bank

    The National Housing Bank was setup in
     1988 as a subsidiary of Reserve Bank of
     India. It is a principal agency promoting
     housing finance institutions both at local
     and regional levels and provides financial
     and other support to such institutions.




Chapter -10         Merchant Banking & Financial Services
Housing Financial Services

    Project Finance
    Refinance Assistance From NHB




Chapter -10      Merchant Banking & Financial Services
Types of Home Loans

    Home Purchase Loan
    Home Improvement Loan
    Home Construction Loan
    Home Extension Loan
    Home Conversion Loan
    Land Purchase Loan
    Bridge Loan
    Balance Transfer Loan
    Refinance Loan
    Stamp Doty Loan
    Loans to WRXs



Chapter -10            Merchant Banking & Financial Services
Innovative Home Loan Schemes

    Step Up Repayment Facility (SURF)
    Flexible Loan Instalment Plan (FLIP)
    Balloon Payment




Chapter -10       Merchant Banking & Financial Services

				
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