RBI Exhorts States for Single-window Nod to Affordable Housing
Updated: Jun 17, 2019
The Reserve Bank of India governor Urjit Patel today called for a separate single window mechanism for clearance of affordable housing projects as many are stuck at state government bodies.
He said that affordable housing needs greater focus and has strong multiplier impact on the growth. Under the pradhan mantri awas yojana, government is targeting at housing for all by 2022.
“We have mentioned that we could have stronger growth performance if some of these things are taken forward in particular removing infra bottlenecks, finding measures to reinvigorate private investment and provide thrust to affordable housing initiative of the government, which has a potential for very strong multiplier effects,” said Urjit Patel governor RBI at press briefing post announcement of the bi-monthly monetary policy. “Fair number of pieces of the jigsaw is already in places.”
Affordable housing segment is booming with the push from government. According to industry estimate, disbursements in affordable housing of loans below Rs 10 lakhs have grown 43% in the last financial year. Overall housing loans grew by 23% while home loans above Rs 25 lakh saw a marginal decline of 1% during the last financial year.
“I think, we need a time bound, single window clearance of this very important initiative, which has the potential for growth is going to come into place,” said Patel.
Approval time usually ranges from six to 12 months. The process and time required for permissions is the same for all projects including affordable, middle income or luxury.
In a report India Ratings had said that it expects demand for 25 million homes i.e, 4x of the entire current housing finance stock over financial year 2016-17 to 2021-22 in the medium income group and lower income group categories.
Affordable housing finance largely for loan ticket size up to Rs 15 lakh will become a large segment for housing finance companies in the next five years, with the estimated share to increase to around 37% in FY22 said India Ratings and Research.
“Town planning is invariably not very supportive of affordable housing. Factors such as density restrictions prevent developers from building small format homes. In Rajasthan, the approvals take around two months with single window clearance. I am surprised as to why this cannot be replicated in other states,” said Rajesh Krishnan, CEO of Brick Eagle that incubates affordable housing developers and funds their projects.
According to Liases Foras, there were around 5,500 projects with apartments priced less than 30 lakh, while 10,000 projects were in less than 50 lakh price category across 60 cities of India as of March quarter end.
“Approvals are a major issue in expensive property markets such as Mumbai Metropolitan Region, National Capital Region and Bangalore. It is not much of an issue in tier II, III and smaller towns. Apart from approvals, the biggest hurdle for affordable housing is expensive land prices,” Pankaj Kapoor, managing director of Liases Foras Real Estate Rating & Research.
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