1.0 Genesis of the Scheme
1.1.1 While announcing the Budget for the year 1997-98, the Hon’ble Finance Minister stated:
“In consultation with the National Housing Bank (NHB) and others, I have worked out a Plan. Loans upto Rs. 2 lakhs will be given for building houses in freehold land in rural areas at normal rates of interest, subject to the borrower putting in one-third of the value of the house. NHB has been requested to prepare a scheme in which other organizations will also participate. The Prime Minister will launch the scheme on August 15, 1997 and it is our goal to sanction 50,000 loans in the first year”.
1.1.2 The same announcement was made in light of the housing situation in the rural areas at that time:
As per 1991 census, there are 152.01 million households comprising of 111.59 million (73.4%) in rural areas and 40.42 million (26.6%) in urban areas. The average growth of rural households is estimated to be 1.94 % per annum as against the national average of 2.4 %. The total housing stock i.e. occupied residential houses is estimated at 147.01 million of which 107.94 million (73.4%) are in rural areas. Of the total households in rural areas, about 10.31 million live in unserviceable kutcha houses and 3.41 million are without independent shelter. In total, the housing shortage in rural areas as per 1991 census is estimated at 13.72 million dwelling units. Further, it is estimated that another 10.75 million houses would be needed in rural areas to cover the population/households growth between 1991-2002 A.D. Therefore, the total rural housing shortage has been estimated at 24.47 million houses by 2002 A.D.
According to the estimates, about 6.8 million houses have been added in the rural areas during the period 1991-97. Therefore the rural housing shortage to be tackled during he 9th Five Year Plan period (1997-2002) has been estimated as 17.67 million units, of which 7.36 million units are to be constructed and 10.31 million existing units, to be repaired and upgraded.
1.1.3 Accordingly, the National Housing Bank (NHB) prepared a draft scheme for Rural Housing in pursuance to the Budget Speech by the Hon’ble Finance Minister. Inputs for the Scheme were received from various Ministries of the Government of India, Reserve Bank of India, Public Sector Banks, Housing Finance Companies and the Co-operative sector institutions. The salient features of the Scheme are as under.
1.2 The Objective of the Scheme
1.2.1 The objective of the Scheme is to address the problem of rural housing through improved access to housing credit which would enable an individual to build a modest new house or to improve or add to his old dwelling in rural areas. “Rural Area” for the purpose of the Scheme is the area comprised in any village including the area comprised in any town, the population of which does not exceed 50,000 as per the 1991 Census.
5.3.1 The Scheme envisages at normal rates of interest, the provision of institutional credit to individuals desirous of constructing/acquiring new dwelling units and for improving or adding to existing dwelling units in rural areas.
1.4 Operation of the Scheme
1.4.1 There will be two channels. The first channel will comprise exclusively the commercial banks and the second channel will comprise institutions like the ARDBs, ACHFS, RRBs and HFCs.
1.4.2 At the time of formation of the Scheme, was envisaged that the commercial banks being the largest mobilisers of savings in the economy and having a vast network of branches, including “rural” would play an important and extensive role in successful implementation of the Scheme. It was therefore, envisaged that they may take a major share of the proposed disbursements under the Scheme.
1.5 Monitoring of the Scheme
1.5.1 The performance under the Scheme is being closely monitored by the NHB. The Primary Lending Institutions (PLIs) were required to report the progress on quarterly basis to the NHB in the prescribed format.
1.5.3 Besides, the Reserve Bank of India advised the Conveners of all State Level Bankers Committee (SLBC) to closely monitor the progress of the scheme in the SLBC meetings.
1.6 Lending Norms
1.6.1 The lending norms relating to security, margin, interest rates etc. are followed as per the guidelines issued by the RBI from time to time.
1.7 Support from NHB
1.7.1 Besides providing refinance assistance, NHB also provides necessary professional/specialist inputs by way of guidelines on technical, financial and legal appraisal, construction methodologies including design options and cost estimates thereof, training etc.
1.8 Targets and Achievement
1.8.1 The annual targets under the Scheme (in terms of number of units to be financed) are set by the Government of India and NHB sub-allocates the targets to implementing agencies and monitors its implementation.
1.9 Golden Jubilee Rural Housing Refinance Scheme
The National Housing Bank also provides refinance of loans under the Scheme for loan upto Rs. 15 lakhs.
1.10 Performance Under the Scheme
The annual targets under the Scheme (in terms of number of units financed) are set by the Government of India and NHB sub-allocates the targets to implementing agencies and monitors its implementation. The targets under the Scheme have been increased in a phased manner from 50,000 units in 1997-98 to 250,000 units in 2004-05 and further to 350,000 units in 2008-09. The performance under the Scheme has been satisfactory as may be seen from the Table below. Cumulatively, more than 2.2 million dwelling units have been constructed.
Targets and Achievement under GJRHFS [No of units]