Govt announces measures to strengthen housing finance

Union Finance Minister Yashwant Sinha on Thursday announced in Lok Sabha a series of measures to further strengthen housing finance.

Presenting the Budget for 2002-03, he said the National Housing Bank would launch a Mortgage Credit Guarantee Scheme, which would be provided to all housing loans thereby fully protecting lenders against default.

This will make housing credit more affordable and also increase access to housing credit in rural areas.

He said the target under the Golden Jubilee Rural Housing Finance Scheme would be increased to Rs 225,000 for 2002-03, up from 170,000 in the current year.

About 100,000 units have already been financed up to December 2001.

The allocation for the Indira Awas Yojana is being increased by 13 per cent to Rs 17.25 billion for 2002-03.

Presenting his indirect tax proposals, Sinha proposed to allow the deduction for interest payable on housing loans for self-occupied houses even where such houses are acquired or constructed after March 31, 2003, as long as the acquisition or construction is completed within three years from the end of the financial year in which the loan was taken.

He said following the amendment to the NHB Act, the bank has commenced securitisation of housing loans and is operationalising foreclosure of mortgages.

For giving a further impetus to investment in the housing sector, the finance minister extended the capital gains exemption provided in section 54EC of the Income Tax Act to bonds issued by the NHB.

Total disbursement from housing finance institutions in 2000-01 was Rs 263 billion, a growth of about 28 per cent in the year.

This amount financed the construction of about 2.8 million houses, much higher than the annual target of 2 million houses.

In the current year, the growth rate is expected to be around 35 per cent.

PTI

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