Refinance scheme under affordable housing fund

The document titled “Refinance Scheme Under Affordable Housing Fund” outlines a strategic initiative aimed at enhancing the availability of affordable housing in India through a dedicated refinance scheme. This scheme is designed to provide financial support to primary lending institutions (PLIs) that extend loans for affordable housing projects, thereby addressing the credit needs of various housing agencies and developers.

Overview of the Refinance Scheme

The refinance scheme is implemented by the National Housing Bank (NHB) and targets both public and private agencies involved in affordable housing construction. The primary goal is to facilitate the supply side of the market by offering concessional financial assistance, which is crucial for meeting the increasing demand for affordable housing units across the country.

Objectives

The main objectives of the refinance scheme include:

• Enhancing Financial Accessibility: By providing refinance assistance at concessional interest rates, the scheme aims to make financing more accessible for agencies executing affordable housing projects.
• Supporting Diverse Housing Initiatives: The scheme covers a wide range of housing initiatives, including new constructions, slum rehabilitation projects, and public-private partnerships (PPPs).
• Promoting Sustainable Development: The focus on affordable housing aligns with broader national goals of urban development and social equity.

Key Features of the Scheme

The document outlines several key features of the refinance scheme:

1. Eligibility Criteria:
   • The scheme is available to eligible PLIs that lend to public agencies and private developers.
   • Projects must meet specific criteria, such as having at least 60% of units with a carpet area up to 60 square meters and a maximum cost not exceeding ₹30 lakh per unit.
2. Extent of Refinance:
   • Refinance will be provided based on the proportion of project costs allocated for affordable housing. This ensures that only eligible portions of projects receive financial support.
3. Tenure and Interest Rates:
   • The tenure for refinance assistance will align with the PLIs’ loans, capped at a maximum of five years.
   • Interest rates can be fixed or floating, with concessional rates designed to make borrowing more affordable for developers.
4. Repayment Structure:
   • Repayment of principal will occur quarterly in equal instalments, starting after one clear calendar quarter from the date of disbursement.
5. Promoter’s Contribution:
   • For private agencies, a minimum promoter contribution of 20% of the project outlay is required, ensuring that developers have a vested interest in project success.

Implementation Strategy

The document emphasizes a structured implementation strategy to ensure effective delivery of the refinance scheme:

1. Collaboration with Financial Institutions:
   • The NHB will work closely with various financial intermediaries to optimize reach and market penetration across India.
2. Monitoring and Evaluation:
   • Continuous monitoring will be conducted to assess project performance and compliance with eligibility criteria, ensuring that funds are utilized effectively.
3. Public Awareness Campaigns:
   • Efforts will be made to raise awareness among potential beneficiaries about available financing options and eligibility requirements.

Challenges Addressed

The refinance scheme aims to tackle several challenges prevalent in the affordable housing sector:

• High Construction Costs: By providing financial assistance at lower interest rates, developers can manage construction costs more effectively.
• Limited Access to Capital: The scheme enhances access to capital for smaller developers who may struggle to secure traditional financing.
• Regulatory Barriers: Streamlined processes for accessing refinance can help reduce delays associated with project approvals.

Future Outlook

The document concludes with an optimistic outlook on the impact of the refinance scheme on India’s affordable housing fund landscape. By facilitating access to finance for eligible projects, the scheme is expected to significantly increase the supply of affordable housing units, contributing to national goals of urban development and social equity. In summary, “Refinance Scheme Under Affordable Housing Fund” presents a comprehensive framework aimed at addressing India’s pressing need for affordable housing through innovative financing solutions. By supporting public and private sector initiatives, this scheme promises to enhance affordability and accessibility in housing markets across the country, ultimately fostering sustainable urban development.

Further reading: Affordable Housing, Climate Change and Capital Markets
[PDF] REFINANCE SCHEME FOR CONSTRUCTION FINANCE FOR … mohua.gov
[PDF] REFINANCE SCHEME FOR URBAN HOUSING FUND mohua.gov