Housing Sector Funding
In its bid to inject a funding booster into the country's real estate sector, the finance ministry is all set to consider a proposal to channelize pension, insurance and provident funds into the housing sector. The move will allow the availability of long-term funds from such funding institutions thereby helping the housing finance companies (HFCs) overcome the asset liability mismatches. The HFCs, which get these funds, can then lend to individuals at a lower rate so that these borrowers can purchase affordable houses and that the proposal has already been submitted to the ministry by the National Housing Bank (NHB) and the National Real Estate Development Council (NAREDCO), said sources adding that in its pre-Budget memorandum to the finance ministry, NAREDCO claimed that housing finance is a long-term investment and asset liability mismatch is a major problem for housing finance companies. Access to long-term funds such as provident, insurance and pension funds will ease the situation and that investment in HFCs should be an eligible channelization of these funds.

According to the chairman and managing director, NHB, R V Verma, the proposal is being considered by the ministry as it is a practical suggestion as several countries have channelized long-term funds such as pension, insurance and provident funds to the infrastructure and housing sectors. It is worth mentioning here that the finance ministry has not raised any objections. As in fact, the availability of funds increases due to such initiatives and will also ensure lower EMIs and reduce risks in the housing market. Echoing his view, Chairman, NAREDCO and CMD, Raheja Developers, Naveen Raheja said that the main reason for the acute housing shortage in the country is largely due to lack of funding and that the body has urged the government to unlock fund wherever it is feasible so that the liquidity issues are eased, which in turn will go a long way to benefit the sector.