1. 1
ABSTRACT
The report is prepared on market potential of affordable housing in Tricity area of
Chandigarh. The report gives introduction on current housing scenario in India and current
market situation of real estate market. It also highlights the real estate bill, 2016 passed by the
government in Rajya Sabha.
Further, the report provides introduction on Affordable Housing in India. It highlights the
government’s vision of ‘Housing for All’ by 2022 and propel growth in the realty sector.
Various critical issues and creating affordable housing stock for future needs is discussed in
the report under this chapter.
At HDFC Limited, we were provided with the opportunity to understand the product and
services of the company and the process that they follow for disbursing the loan. The report
gives brief information on the products provided by HDFC to its customers with the term of
loan and the interest rates at which the loans are given. Later, a comparative study of HDFC
with other market players like SBI, LIC housing finance is done in other to analyze the
difference in major market players for housing loan.
The research project on affordable housing in Tricity area of Chandigarh with special
reference to Zirakpur, Peermushalla, Gazipur, and Derabassi is surveyed. At HDFC, we
prepared questionnaire with the help of our guide to survey builders in Zirakpur and around
the area. I, with my team members visited the site offices and collected the information
mentioned in questionnaire from the sales agents and the builders. The information so
collected is analyzed and interpretations are shown in the form of charts. On the basis of
analysis, conclusion of the research project is drawn and presented in the report.
Our project manager suggested us to study housing scenario of some other country as well as
a part of the project. So I have included housing scenario of Bangladesh in the report.
The above mentioned information is discussed below in the report which is divided into
chapters, supported by tables and graphs.

2. 2
TABLE OF CONTENT
Chapter No. Title Page No.
1
Housing scenario in India 3-11
2
Real Estate scenario in India 12-21
3
Affordable Housing in India 22-33
4
HDFC LIMITED and Company’s profile 34-55
5
Affordable housing research project 57-58
6
Research methodology 59-60
7
Interpretation And Analysis 61-71
8
Conclusion 72-73
9
Limitation 73
10
Housing scenario in Bangladesh 74-75
11
Bibliography 76
12
Annexure 77-80

3. 3
CHAPTER 1
INTRODUCTIONON HOUSING IN INDIA
Housing Finance is a specialized form of finance and efficiency of Housing Finance system
in a country is to accelerate the growth of its economy.
Housing is one of the basic needs of mankind in terms of safety, security, self-esteem, social
status, cultural identity, satisfaction and achievement. Growth in the housing sector is
regarded as one of the indicators, which has a reflection on the health of a particular
economy. Today, for India to achieve balanced economic growth, it is essential to boost
construction activity in the housing sector. Housing is an important sector for any economy
as it has inter-linkages with nearly 269 other industries.
Since Independence growth in the Indian population has aggravated the problem of housing
for Indian citizens. According to the population census of 2011, out of the total population of
1027 million about 742 million live in rural areas and 285 million live in the urban areas.
Urban population is accounted as 27.8% to the total population whereas it was 25.7% under
1991 census. So there is rise of 2.1% in the Urbanization of Indian population. There are 27
cities with more than one million populations. This rapid urbanization has lead to a large
number of homeless households, rapid growth of slums and unauthorized colonies, rampant
speculation and deficient availability of water sanitation and basic facilities. This has also
brought along with it disproportionately higher demand for housing- be it for upper market,
middle market and for low income category of population.
Investment in housing is an important driver of overall economic growth. The house-
building industry is an important employer with significant multiplier effects. The housing
industry in India is the second largest employment generator, next to the agriculture sector
and is ranked fourth in terms of multiplier effects, ahead of agriculture and transport.
Housing in India varies significantly and can reflect the socio-economic mix of its vast
population. In the last decade, there has been tremendous growth in the country’s housing
sector, along with demographic changes, rise in income, growth in the number of nuclear
families, and urbanization. The commitment to have housing for all by 2022 is the vision of
the new government, and realizing this dream can be a step towards building a brighter
India.
During last three years, the housing sector has emerged as one of the sectors attracting a large
quantum of bank finance. The current focus of RBI’S regulation is to ensure orderly growth
of housing loan portfolio of banks. Housing is an investment activity and provides boost to
economic growth. It has both forward and backward linkages. Because of its forward and
backward linkages, even a small initiative in housing will lead to multiplier effect in the
economy through the generation of employment and demand. Numerous tax concessions
were announced like currently interest and repayment of borrowed capital.

4. 4
HOUSING SCENARIO IN INDIA
Housing sector in India is second largest employment generator. For every lakh invested
in this sector, 269 new jobs are created in the economy. A unit of increase in the final
expenditure in the housing would generate additional income as high as three times the
income generated within the housing sector in India itself. Every additional rupee invested
in the housing sector will add Rs. 1.54 to the GDP and with household expenditure
considered, this is going to add Rs. 2.84. For every rupee invested in creation of housing, Rs
0.12 gets collected as indirect taxes.
To boost investment in housing industry, the government established the housing
development finance corporation in 1977. In July 1998, the government announced setting
up of national housing bank fully owned by RBI with the objective of providing housing
finance to all sections of society. The national housing bank also functioned as a regulatory
body for the housing finance industry and issued regulatory directions and guidelines to the
housing finance companies.
In India, the demand for housing has increased rapidly due to population growth, migration
from rural areas to urban areas and breakdown of traditional joint families. The information
technology revolution and rapid growth of knowledge based industries in recent years have
also further contributed to the already growing acute shortage of housing India particularly in
urban areas. Since housing requires huge investment, a critical constraint for the development
of housing is lack of finance.
The housing shortage in India is enormous. 26 million homes are projected to be required
by 2015 to meet existing housing need, and 99% of these homes are needed by households
in the Economically Weaker Sector (EWS) and Lower Income Group (LIG) . If the current
increase in backlog of housing is maintained, a minimum of 30 million additional homes will
be required by 2020. Whilst some housing demand will be taken up within the existing
housing stock, many millions of homes will need to be built across India to fulfill the vision
of becoming slum free. The challenge is not only to build many homes, but also to ensure that
they are built at the right location, available at an affordable price to households that are in
most need and of adequate quality to endure in the longer term. The current housing
financing sources is dominated towards servicing the population identified as Middle Income
Group (MIG) and above. As a result, provision of housing finance for households falling
under the Low Income Groups and Economically Weak Sections is low and these categories
find it difficult to secure formal housing finance.
Presently, affordable housing is basically targeting the economically weaker class and
low-income groups and constitutes majority of the Indian housing industry, both in terms of
value and volume. Besides, luxury housing is also expected to witness significant growth in
the coming years as this market segment is comparatively very small and possesses huge
potential for further developments.

5. 5
HOUSING FINANCE MARKET
Housing industry is important systemically, as it affects 269 industries directly and indirectly.
A number of efforts were made by different institutions to help develop the market. The
guidelines issued by the Reserve Bank encouraged the development of the housing sector –
loans extended up to a stipulated amount in the housing sector were included in the priority
sector and targets were set for commercial banks to lend to the sector. HUDCO and also the
National Housing Bank was instrumental in developing the housing finance markets.
The government also stipulated that Life Insurance Corporation of India (LIC), General
Insurance Corporation of India (GIC) and Provident Funds are statutorily required to invest in
housing sector.
Banks and HFCs, are the major players in the housing finance market in India. While
Banks are subject to regulation and supervision by the Reserve Bank of India, HFCs are
regulated and supervised by National Housing Bank under the provisions of the National
Housing Bank Act, 1987 and the directions and guidelines issued there under from time to
time. The regulatory measures include prudential norms, transparent and standardized
accounting and disclosure policies, fair practice code, asset liability management and other
risk management practices etc. These measures have helped to ensure the development of the
sector on healthy and sustainable lines. NHB extends financial assistance to banks, HFCs,
and cooperative sector institutions, towards their individual housing loans .
INSTITUTIONS IN HOUSING MARKET
A number of institutions have been instrumental in developing the housing finance market in
India. These mainly are the Central and State governments, RBI and NHB which are as
follows-
Government- The role of the Government in recent years has switched from that of a
provider of housing units to more of a market facilitator. The Five Years Plans starting from
1951 had assigned housing sector a prominent place in the economy. The National Buildings
Organization (NBO) was established in 1954 under the Ministry of Housing and Urban
Poverty Alleviation for technology transfer, experimentation, development and dissemination
of housing statistics. NBO was further restructured in 1992 and 2006 with the revised
mandate keeping in view the current requirements under the National Housing Policy, and
various socio-economic and statistical developments connected with housing and building
activities. The setting up of Housing and Urban Development Corporation Ltd. (HUDCO) on

6. 6
April 25, 1970 to comprehensively deal with the problems of growing housing shortages,
rising number of slums and for fulfilling the pressing needs of the economically weaker
section of the society was one of the significant steps in the series of initiatives taken by
Government. The National Housing Policy was announced in 1988 which had a long term
aim of eradicating houselessness, improving the conditions of the inadequately housed and
providing a minimum level of services/amenities to all. National Housing bank was
established in 1988 under an Act of the Parliament to function as a principal agency to
promote housing finance institutions and to provide financial and other support to such
institutions.
Reserve Bank ofIndia- Asset prices are very important for monetary policy, because
when bubbles, big or small, burst, the cleaning up of the mess, is a long and unhappy
experience. The Reserve Bank has initiated several measures in the housing sectors.
Commercial banks are required to lend 3 per cent of the incremental deposits towards the
priority sector, in which housing is an important component. The Reserve Bank also includes
investment made by banks in the Mortgage Backed Securities (MBS) since 2004 as flow of
credit to housing; assigning lower risk weight to housing and benign interest rate
environment has contributed to increase in housing loans. Growth in housing loans has also
been assisted by the comfort of relative safety of such assets given the tangible nature of the
primary security and the comfort obtained from the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 and the
amendment in December 2012.
NationalHousing Bank-National Housing Bank has been playing an important role in
regulating and supervising the housing finance companies. In recent years, especially since
2001, a number of new players have entered the housing finance market with competitive
offerings which have helped increase the demand for housing loans. These housing finance
companies/banks have been passing on the benefit of lower cost of funds to customers. Most
of these financing institutions, besides simplifying the process of availing loans, have also
introduced new products and variants targeted at specific customer segments.
India Mortgage GuaranteeCorporation-India Mortgage Guarantee Corporation
(IMGC) was founded in June 2012 with a vision to make early home ownership a real
possibility through the provision of mortgage guarantees. It benefits the home buyer
(borrower) by lowering down-payment amounts and increased home ownership at an
accelerated pace and makes loan available at better terms. It benefits the lender by providing
higher capital relief, increased earning on assets without incremental risk.

7. 7
CURRENT STATE OF HOUSING IN INDIA
THE GROWTH OPPORTUNITY IN
HOUSING FINANCE
The working group on rural housing for the 12th five year plan pegged the overall housing
shortage at 63 million dwelling units, of which a majority is for low-income population. The
Economically Weaker Sections (EWS) and Low Income Group (LIG) households may not be
able to afford privately built housing without aid from the government. But even if we were
to consider only the shortage in the population segment having a monthly household income
of more than Rs. 10,000, the shortfall is around 25 million dwelling units. This segment is
largely ignored by banks and large housing finance institutions because of the higher costs of
credit-evaluation of these borrowers and the perceived higher credit risk involved. Further,
Housing shortage of about six crore units
Level of annual investments in the housing sector is
about USD110 to 120 billion
Prioritised rural growth resulting in uneven distribution
of housing development
Average growth of 5 to 6 per cent in the annual real
estate sector investments between FY08 and FY14
Both the central and state governments are spending
about USD5 to 6 billion annually on housing.

8. 8
the mortgage penetration in India from formal lending sources is only 9%, while the
remaining 91% of the houses are built using own funds and from informal sources of
borrowing. The penetration levels are among the lowest among emerging and advanced
economies. The population dependent on informal sources of borrowing primarily consist of
the low income and economically vulnerable sections of the population that do not have own
resources or access to institutional sources of borrowing for constructing houses. This
presents a huge opportunity for niche housing finance companies which focus on lending
to borrowers in the low-middle income segment without a formal proof of income and
those who have an uneven pattern of cash flows.
Further, FDI in India’s booming real estate and housing market jumped 80 times between
2005 and 2015. Moreover, private equity funds are also venturing into development of
housing projects. The fund houses are developing their own projects in order to endow better
returns for their investors.
PROBLEMSOF HOUSING FINANCEIN INDIA
GOVERNMENT POLICIES
NON AVAILABILITY OF FUNDS
HIGHER COST OF LAND
STATIC CULTURE OF SOCIETY
UNPLANNED GROWTH
SLOW PROGRESS OF HOUSING

9. 9
1. GOVERNMENTPOLICIES-Government considers housing as a primary
segment of development. Fortunately in India the housing shortage has considered as
a significant problem by the Government since beginning of last two decade i.e. from
1996. The lower or middle-income group population of India is considered to be
suffered by the prospects of owning a house due to lack of affordability of big amount
in the present time. The housing finance sector of the country is suffering from
considerable financial resources and due to the low paying capacity of most of the
Indian population, it finds itself handicapped to provide the financial assistance for
dwellings to these people. In the present circumstance, the Government of India is
trying to play the role of facilitator by offering a number of housing schemes for
different sections of the society, but due to poor administrative control and lack of
strong will-power most of the schemes are squeezed only upto the primarily levels
and are never attained its ultimate objectives.
2. NON AVAILABILTY OF FUNDS-Financing in any area depends upon the
availability of funds for the purpose. Housing finance is a long-term investment,
which requires a great amount of funds. One of the main problems of housing finance
sector of India is non-availability of long-term capital for investment. Traditionally,
the funds for the housing sector have come from the individuals themselves by way of
their own savings or from the financial institutions that are primarily engaged in the
intermediation process of channelizing funds from the savers to the borrowers.
However, the funds so mobilized through the formal sector financial institutions
remain much lower than what is required to tackle the problems of housing finance in
India. In the absence of sufficient resources for long-term capital, the housing finance
sector of India depends upon the Government of India's policies for its survival and
the Government plays a significant role in making long-term funds resources
available either directly or indirectly. Sometimes the Government provides substantial
funds for housing at subsidized rates.
3. HIGHER COST OF ACQUISITION OF LAND- In present time the
supply of land is perfectly inelastic for a country. The availability of land in adequate
quantity at the right place and at an affordable price by the individual is more
important for housing finance sector. The inelastic supply of suitable land results in a
spurious increase in the cost of real estate. Besides, the very high stamp duty payable
at the time of purchase of property is also cause an increase in the cost of land
significantly. It gets priced out many potential housing finance customers in owning a
house. On the other face, the high cost of stamp duty also results to show the value of
land quite less than its real value. Housing Finance Companies extend loans on the
mortgage of the property and the borrowers are required to execute document for
creation of mortgage in favor of HFBs. If the property is undervalued, the HFBs will
sanction the loan up to the paper value of property and it will reduce the borrowing
power of individual. It is also a major problem for housing finance sector of the
country. It is desirable that the Government should take bold steps in controlling the
rates of land particularly in urban and nearby areas and should reduce the stamps duty

10. 10
up to a reasonable level. Besides, the stamp duties structure should be uniform
throughout the country.
4. STATIC CULTURE OF SOCIETY-. Among Indian society, housing is a
life-time dream of an individual and a newly employed person cannot even image for
his own house due to his social and cultural backgrounds. Although this attitude of
society is changing from last decade due to development of nuclear families tax rebate
on housing loans. Secondly, the debt is considered as an evil in Indian society and the
concept of 'Deficit Financing' is not appreciated by the masses. This type of thinking
discourages a person to avail the facility of housing finance and ultimately hurts the
housing finance market of country remarkably. Although this concept is now
changing, which is evident from the fact that the average age of borrower is around 40
yrs? The joint family culture of Indian society also legs the housing finance market to
some extent.
5. UNPLANNED GROWTH OF SETTLEMENTS- A number of housing clusters
have mushroomed in and around various metropolitan centers in haphazard and
unplanned manner, without a proper layout and devoid of service lines and other
essential facilities. These unauthorized developments are encroachments on land
parcels belonging to Govt. bodies, public- private-institutions or areas meant to be
green belts. The removal/ re-settlement of these overcrowded un-hygienic clusters,
commanding massive vote banks, is a serious challenge to correcting these aberrations
for a planned growth of cities, especially in our democratic set-up? Therefore,
massive concerted effort needs to be made with best of administrative actions and deft
political handling for the sake of our future generations.
6. SLOW PROGRESSOF HOUSING MOVEMENT IN INDIA- Housing
activities can be promoted easily, when these are made by groups, because a group
can handle all the technical as well as financial problems more comfortably in
comparison to an individual. Housing financing agencies feel themselves more safe
and comfortable to deal with a co-operative housing society. In India, the National
Co-operative Housing Federation of India (NCHF), established in 1969, is functioning
under the administrative control of the Ministry of Urban Development and Poverty
Alleviation. Promotion of apex federations in those states where such organizations
do not exist, promotion of co-operative housing through publications, periodicals and
exchange of information etc. are other objectives of NCHF. Although the number of
housing co-operatives in the country seems very large but when we consider over the
total transactions of housing finance made by these societies since their inception, it
shows an unsatisfactory growth of this movement in India. During the personal
survey, this fact was revealed that due to the culture of combined families and Hindu
undivided families in India, the co-operative concept is not very much appreciated by
the society. This hurts the progress of housing finance sector significantly.

11. 11
FRAMEWORKOF CENTRALGOVERNMENT
FOR HOUSING DEVELOPMENTIN INDIA
 Absence of an effective policy framework for Economically Weaker Section (EWS)
and Lower Income Group (LIG) housing, which is compounded with rising land cost,
spiraling construction costs, and inadequate availability and reach of micro-finance
measures.
 Long gestation period of six to eight years of housing projects, accentuated by
multiple approvals to be obtained from multiple authorities in a two to three year time
period.
 Inadequate long-term funding across the project life cycle necessitating multiple
rounds of funding for the same project increasing the cost of capital and time. Further,
the funding is not available for acquiring of land from banking sources.
 Rationalize multiple fees and taxes across project stages which inflates construction
cost by 30 to 35 per cent
 Reassessment of development norms such as low FAR/FSI, density norms, parking
norms, and ground coverage, especially from the EWS housing development
perspective.
 High urbanization rate, coupled with high rate of migration from rural areas is
stressing the limited urban infrastructure; sub-optimal usage of urban land (low
FAR/FSI) has resulted in raising the cost per unit of built-up area.
 Need to focus on urban housing; especially on affordable housing as it constitutes
about 70 per cent of the projected total urban housing need.
 The five to six per cent CAGR in housing investment, witnessed over the last few
years, may result in total investment of about USD1.4 to 1.5 trillion till 2022, falling
short of about USD500 to 600 billion of investments envisaged.
 There is a pressing requirement of integrated city planning on two fronts: firstly, an
extensive; problematic term spatial planning accounting for the housing shortage and
associated urban infrastructure (roads, highways, energy, sewerage, water, waste and
transport, secondly, focus on development of new satellite towns/cities to meet the
rising urban and rural housing needs.
 Lack of coordination between central and state ministries that can be countered by
introducing regulatory reforms with a view to substantially increase the housing
development capacity with respect to construction capability, labour availability,
construction material and housing affordability.

12. 12
CHAPTER2
REAL ESTATE SCENARIO IN INDIA
The real estate sector is one of the most globally recognized sectors. The Indian real estate
sector has been a major beneficiary of the strong economic growth witnessed in India since
the year 2000. In India, real estate is the second largest employer after agriculture and is
slated to grow at 30 per cent over the next decade.
Real estate is currently the fourth-largest sector in the country in terms of Foreign Direct
Investment (FDI) inflows which opened its doors for foreign investors in 2005. Total FDI in
the construction development sector during April 2000–May 2015 stood at around US$
24.07 billion. The Government of India has been supportive to the real estate sector.
According to data released by Department of Industrial Policy and Promotion (DIPP), the
construction development sector in India has received Foreign Direct Investment (FDI)
equity inflows to the tune of US$ 24.156 billion in the period April 2000-September 2015.
The Indian real estate market has become one of the most preferred destinations in the Asia
Pacific as tourism funds accounted for more than 50 per cent of all investment activity in
India in 2014, compared with just 26 per cent in 2013.
0
0.5
1
1.5
2
2.5
3
3.5
Series1
FDI in real estate

13. 13
The real estate sector comprises four sub sectors - housing, retail, hospitality, and
commercial. The growth of this sector is well complemented by the growth of the corporate
environment and the demand for office space as well as urban and semi-urban
accommodations.
It is also expected that this sector will incur more non-resident Indian (NRI) investments in
both the short term and the long term. Bangalore is expected to be the most favored
property investment destination for NRIs, followed by Ahmadabad, Pune, Chennai, Goa,
Delhi and Dehradun.
The real estate sector is thought to be collapsing due to increasing costs of financing. Real
estate projects in India take a long time to complete due to a complicated and corrupt
regulatory mechanism. Several of the India's publicly traded real estate firms are in debt.
According to Mumbai-based market research agency, Liases Foras, 30% of the transaction in
the real estate sector is done with black money.
The demand for properties -residential as well as commercial- depends upon the
performance of the economy. However, local factors, too, matter. So, properties in one city or
a location within a city can perform differently from each other depending upon the state of
the local economy and factors such as infrastructure. The market goes through phases of
growth as well as depression. For instance, at present, there are more houses ready for sale
than there is demand for. If we look at the difficulties developers are facing in selling homes,
the Indian market is in a depression, though still not at the lowest point of the trough. One
reason for the slowdown in sales is not shortage of buyers but unaffordability of habitable
units in most cities such as Delhi and Mumbai.
In a September 2013 interview, Venkatesh Panchapagesan, the Head of Century Real Estate
Research Initiative, IIM, Bangalore, said that the weakening of the rupee and lack of credit in
the sector would cause prices to fall. He also said the prices should be falling faster, but due
to the lack of transparency in the sector, it is not doing so.
In recent years ,the real estate market has been among the sectors worst hit by the economic
downturn which, coupled with high interest rates in the face of persistent inflation and delays
in securing mandatory government approvals, has kept wary homebuyers away from the
market.

14. 14
DRIVERS OF THE REAL ESTATE SECTOR
1. ECONOMIC GROWTH-
 Indian economy is expected to be the fastest growing economy for the next few
decades.
 The growth could be primarily driven by infrastructure investment and the rising
manufacturing and service sector.
2. URBANISATION-
 About 10 million people are moving to Indian cities every year.
 Urban areas are expected to contribute 70-75% to nations GDP by 2025
 About 2 million houses are required to be developed each year , typically in

15. 15
the affordable segment.
3. RISING INCOME LEVEL-
 The per capita income in urban India is expected to triple from USD 2800 in
2012 to USD 8300 in 2028.
 The rising income supports the growth of retail and residential real estate.
4. YOUNGER AND SMALLER FAMILIES-
 The average household size is expected to decrease from 4.8 currently to just
above 4.4
 The fall in household size is expected to add about demand for 10 million new
housing units.
 About 35% of Indians population is between 15-30 age brackets which are
expected to drive the demand for housing over the next 15 years.
Primary source of real estate financing
Market Size
The Indian real estate market is expected to touch US$ 180 billion by 2020. The housing
sector alone contributes 5-6 per cent to the country's Gross Domestic Product (GDP).
The market size of this sector is expected to increase at a Compound Annual Growth Rate
(CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are also growing
significantly, providing the much-needed infrastructure for India's growing needs.
Private Equity (PE) funds and Non-Banking Financial Companies (NBFCs) in India are seen
increasingly investing jointly in real estate projects, in order to hedge risk and undertake
bigger transactions. Deal sizes have also increased in 2015, and residential projects both
luxury and affordable have attracted a substantial amount of capital.

16. 16
According to a report, “Mumbai is the best city in India for commercial real estate
investment, with returns of 12-19 per cent likely in the next five years, followed by
Bangalore and Delhi-National Capital Region (NCR). Also, Delhi-NCR was the biggest
office market in India with 110 million sq ft, out of which 88 million sq ft were occupied.
Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand
for office space in recent times”.
India's office space absorption stood at 35 million sq ft during 20152, which is the second
highest figure in the India's history after 2011, and was driven by corporate implementing
their growth plans.
Delhi’s Central Business District (CBD) of Connaught Place has been ranked as the sixth
most expensive prime office market in the world with occupancy costs at US$ 160 per sq ft
per annum.
GovernmentInitiatives
The Government of India along with the governments of the respective states has taken
several initiatives to encourage the development in the sector. The Smart City Project, where
there is a plan to build 100 smart cities, is a prime opportunity for the real estate companies.
Below are some of the other major Government Initiatives:
The Government of Rajasthan became the first state to initiate private investments in
affordable housing by signing four Memoranda of Understanding (MoUs) with private
players for an investment of Rs 5,400 crore (US$ 810 million).
The Ministry of Housing and Urban Poverty Alleviation (HUPA) has commissioned a study
by Indian Institute of Technology, Kanpur on testing of new construction technologies, with
the objective of promoting new housing technologies in the country.
India’s Prime Minister Mr Narendra Modi approved the launch of Housing for All by 2022.
Under the Sardar Patel Urban Housing Mission, 30 million houses will be built in India by
2022, mostly for the economically weaker sections and low-income groups, through public-
private-partnership (PPP) and interest subsidy.
The Government of India has relaxed the norms to allow Foreign Direct Investment (FDI) in
the construction development sector. This move should boost affordable housing projects and
smart cities across the country.
The Securities and Exchange Board of India (SEBI) has notified final regulations that will
govern real estate investment trusts (REITs) and infrastructure investment trusts . This move
will enable easier access to funds for cash-strapped developers and create a new investment
avenue for institutions and high net worth individuals, and eventually ordinary investors.
The Government of Maharashtra announced a series of measures to bring transparency and
increase the ease of doing business in the real estate sector.

17. 17
The State Government of Kerala has decided to make the process of securing permits from
local bodies for construction of houses smoother, as it plans to make the process online with
the launch of software called 'Sanketham'. This will ensure a more standardized procedure,
more transparency, and less corruption and bribery.
RoadAhead
According to Financial Express,’ 2016 may well bring an end to the long and painful journey
this sector has had, and signal an upward growth trajectory. It will definitely mature further
into an organized industry in which some lesser-organized players become casualties and
more mature investors will come in and buy built-up retail spaces. Once they have the
relevant experience and foothold in India, they will start investing in ‘greenfield’ assets.
However, 2016 will see a continued dearth of quality retail spaces. Retailers will have to
revisit their real estate strategy and have a flexible approach, customized to different micro-
markets’.
Responding to an increasingly well-informed consumer base and, bearing in mind the aspect
of globalization, Indian real estate developers have shifted gears and accepted fresh
challenges. The most marked change has been the shift from family owned businesses to that
of professionally managed ones. Real estate developers, in meeting the growing need for
managing multiple projects across cities, are also investing in centralized processes to source
material and organize manpower and hiring qualified professionals in areas like project
management, architecture and engineering.
The growing flow of FDI into Indian real estate is encouraging increased transparency.
Developers, in order to attract funding, have revamped their accounting and management
systems to meet due diligence standards.

18. 18
REAL ESTATE BILL 2016
The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of
India which seeks to protect home-buyers as well as help boost investments in the real
estate industry. The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok
Sabha on 15 March 2016 which substantially amends the original Real Estate (Regulation
and Development) Bill, 2013.
The Bill largely seeks to protect the interest of the purchasers by promoting transparency,
accountability and efficiency in the construction and execution of real estate projects by
promoters. It also holds the promoters accountable for not registering their projects with the
Real Estate Regulatory Authority (Regulatory Authority) or for providing insufficient
information regarding their project. In addition to the promoter and allottees, the Bill also
brings real estate brokers who facilitate the sale and purchase of units in a project within its
ambit.
. The government appears to be working towards its promise to deliver its vision of ‘Housing
for All’ by 2022 and propel growth in the realty sector.
The Bill requires every state to draft its respective laws within one year from the date, when
Bill becomes the law. The proposed regulator, to be set up in each state, is expected to
address one of the key concerns of the property buyer – timely delivery. As per the Ministry
of Finance’s Economic Survey 2015-16, about 25 per cent of the residential real estate
projects are delayed due to poor project management, lack of capital and commitment by
developers, and delay in seeking regulatory approvals. Developers may now need to upgrade
their project development skills, especially in the area of project planning, project
management, risk management, engineering and design, etc., to deliver qualitatively on time.
As a next step, the government must complement this landmark development by addressing
various supply side issues, especially the approval mechanism. At present, a developer may
have to deal with over 40 regulatory bodies, across the real estate development life cycle, to
deliver a project. The approval mechanism must be streamlined and priority must be given to
graduating towards a single window clearance.
The Real Estate Bill 2016 includes following points-
1. RealEstate RegulatoryAuthority-Under the Bill, instead of a regular forum
of consumers, the purchasers of real estate units from a developer would have a

19. 19
specialized forum called the "Real Estate Regulatory Authority" which will be set up
within one year from the date of coming into force of the Act. In the interim, the
appropriate Government (i.e., the Central or State Government) shall designate any
other regulatory authority or any officer preferably the Secretary of the department
dealing with Housing, as the Regulatory Authority.
2. Registrationwith the RegulatoryAuthority-
a. The promoter has to register their project (residential as well as commercial) with the
Regulatory Authority before booking, selling or offering apartments for sale in such
projects. In case a project is to be promoted in phases, then each phase shall be
considered as a standalone project, and the promoter shall obtain registration for each
phase.
b. Further, in case of ongoing projects on the date of commencement of the Act which
have not received a completion certificate, the promoter of such project shall make an
application to the Regulatory Authority for registration of their project within a period
of three months of the commencement of the Act.
3. Carpet Area-
Under the Bill, developers can sell units only on carpet area, which means the net usable floor
area of an apartment. This excludes the area covered by the external walls, areas under
services shafts, exclusive balcony or verandah area and exclusive open terrace area, but
includes the area covered by the internal partition walls of the apartment.
4. 70% of realization from allottees in a separate bank account-
a. The Act mandates that a promoter shall deposit 70% of the amount realized from the
allottees, from time to time, in a separate account to be maintained in a scheduled
bank. This is intended to cover the cost of construction and the land cost and the
amount deposited shall be used only for the concerned project.
b. The promoter shall be entitled to withdraw the amounts from the separate account, to
cover the cost of the project, in proportion to the percentage of completion of the
project. However, such withdrawal can only be made after it is certified by an
engineer, an architect and chartered accountant in practice that the withdrawal is in
proportion to the percentage of completion of the project.
c. The promoter is also required to get his accounts audited within six months after the
end of every financial year by a practicing chartered accountant. , Further, he is
required to produce a statement of accounts duly certified and signed by such
chartered accountant, and it shall be verified during the audit that (i) the amounts
collected for a particular project have been utilised for the project; and (ii) the
withdrawal has been in compliance with the proportion to the percentage of
completion of the project.
5. Acceptance orrefusal of registration-
a. Upon receipt of an application by the promoter, the Regulator Authority shall within a
period of 30 days, grant or reject the registration.

20. 20
b. Upon granting a registration, the promoter will be provided with a registration
number, including a login Id and password for accessing the website of the
Regulatory Authority and to create his web page and to fill in the details of the
proposed project.
c. If the Regulatory Authority fails to grant or reject the application of the promoter
within the period of 30 days, then the project shall be deemed to have been registered.
d. The registration, if granted, will be valid until the period of completion of the project
as committed by the promoter to the Regulatory Authority. This period shall be
extended by the Regulatory Authority for a period not exceeding one year in
aggregate, only due to force majeure and on payment of such fee as may be specified
by regulations made by the Regulatory Authority.
6. Website of the RegulatoryAuthority-
No promoter is allowed to advertise, market, book, sell or offer for sale, or invite
persons to purchase any plot, apartment or building, in a project without registering
with the authority.
The regulator, within a year of its establishment, must have an online system for
submitting applications for registration of projects. The authority must grant
registration to a project within 30 days of receipt of an application provided it meets
the rules. In an ongoing project, the promoter has to apply for registration within three
months of commencement.
7. Advertisement or prospectus issuedby the promoter-
Faulty advertisements and mis-selling has also come under the scanner as builders can
no longer put flashy designs or photographs of a project to attract buyers if the final
project does not match the photographs. In case of a mismatch, the builder has to
return the payment with interest to buyers.
8. Limit on receiptof advance payment-
A promoter shall not accept a sum more than 10% percent of the cost of the apartment,
plot, or building, as the case may be, as an advance payment or an application fee, from a
person without first entering into a written agreement of sale with such person and register
the said agreement of sale, under any law for the time being in force.
9. Structural defect-
In case any structural defect or any other defect in the workmanship, quality or provision of
services or any other obligations of the promoters is brought to the notice of the promoter
within a period of five years by the allottee from the date of handing over possession, the
promoter shall rectify such defect without any further charge, within thirty days. If the
promoter fails to rectify such defect within such time, the aggrieved allottee shall be entitled
to receive appropriate compensation in the manner as provided in the Act.
10. Refund of amount in case ofdelay in handing over possession-

21. 21
In case the promoter is unable to hand over possession of the apartment, plot or building to
the allottee (i) in accordance with the terms of the agreement of sale; or (ii) due to
discontinuance of his business as a promoter on account of suspension; or (iii) revocation of
his registration or for any other reason, then the promoter shall be liable, on demand being
made by the allottee, to return the amount received by him from the allottee with interest and
compensation at the rate and manner as provided under the Act. This relief will be available
without prejudice to any other remedy available to the allottee.
11.RealEstate Appellate Tribunal-
a. In addition to the establishment of the Regulatory Authority, the Bill also proposes to
establish a Real Estate Appellate Tribunal (Appellate Tribunal) within one year from
the date of commencement of the Act.
b. Any person aggrieved by any direction or decision made by the Regulatory Authority
or by an adjudicating officer, may make an appeal before the Appellate Tribunal
within a period of 60 days from the date of receipt of a copy of the order or direction.
c. The Appellate Tribunal shall deal with the appeal as expeditiously as possible and
Endeavour shall be made to dispose of the appeal within a period of sixty days from
the date of receipt of appeal.
d. The Appellate Tribunal shall have same powers as a civil court and shall be deemed
to be a civil court. An appeal against the order of the Appellate Tribunal may be filed
before the jurisdictional High Court within a period of sixty days from the date of
communication of the decision or order of the Appellate Tribunal.
12.Offences and Penalty
a. Stringent penal provisions have been prescribed under the Act against the promoter in
case of any contravention or non-compliance of the provisions of the Act or the
orders, decisions or directions of the Regulatory Authority or the Appellate Tribunal
which are the following:
Promoter: For non-registration of a project a promoter is liable to a penalty that may
extend up to 10 per cent of the estimated cost of the project, as determined by the
authority. If a promoter does not comply with the orders, decisions or directions issued by
the authority, he is punishable with imprisonment of up to three years.
Similarly, non-compliance with any orders of the appellate tribunal is punishable with
imprisonment that may extend up to three years, or with a daily fine that may
cumulatively extend up to 10 per cent of the estimated project cost, or both.
Allottee: If any allottee fails to comply with, or contravenes any of the orders, decisions
or directions of the authority, he is liable to a penalty that may extend up to five per cent
of the cost of the plot, apartment or building, as determined by the authority.
Non-compliance with any order of the appellate tribunal could attract prison terms of up
to one year, along with a fine that may cumulatively extend up to 10 per cent of the cost
of the plot, apartment or building.

22. 22
CHAPTER 3
AFFORDABLE HOUSING IN INDIA
Affordable housing in India refers to housing for the economically weaker section and
lower income group households. This segment accounts for 85-90% of the total residential
development in the country i.e. about 40-45 million housing units by 2028. Affordable
housing in current scenario of real estate market appears to be a bright opportunity for
development.
Affordable housing can be defined using three key parameters - income level, size of
dwelling unit and affordability. While the first two parameters are independent of each
other, the third parameter is correlated income. Housing costs include taxes and insurance for
owners, and utility costs. If the monthly carrying costs of a home exceed 30–35 percent of
household income, the housing is considered unaffordable for that household.
Affordable housing is a term used for residential units in India's urban areas which are
affordably priced with respect to households that fall within a specific limited income range.
There is no single set of parameters to define what an affordable housing unit should cost in
India. This is because the pricing and feasibility to developers of affordable housing is a
function of the city, location within the city, and type of project being built and also the
construction technology employed. The shortage of affordable housing in India is getting
worse instead of better. The country's urban population of 285 million has multiplied itself by
five over the last half century. It is projected that it will continue to increase at this fast pace,
and that 50% of all Indians will be living in urban areas by the end of the next three decades.
According to business standard, “The demand for affordable housing is 535,400 units across
Delhi, national capital region (NCR), Mumbai metropolitan region, Bangalore, Chennai,
Hyderabad, Kolkata and Pune. This is based on the demand for units in the price range of Rs
20-50 lakh in these cities, except for Mumbai where the range is Rs 50-70 lakh”.
EMERGENCEOF AFFORDABLEHOUSING

23. 23
The economic slowdown of 2009 changed the business climate, forcing real estate
developers to focus on affordable housing. In the operating model that Indian homebuilders
followed prior to the crisis, much of the construction activity was financed with customer
advances collected through pre-construction bookings. Thus, construction activity was
largely dependent on advance bookings by customers. This model worked fine during times
of economic boom, when there was a huge demand for residential real estate. However,
muted real estate demand with the outbreak of the economic slowdown highlighted the
weaknesses of this model. With demand falling, collections from advanced bookings also
decreased, and homebuilders were pinned on the mat by a funding crunch. As a result,
construction activities suffered, projects were postponed, and occasionally, developers had to
resort to distressed sales at deep discounts. The crisis saw the concept of affordable
housing emerge in India. The mass appeal of affordable housing led to volumes outpacing
that for premium housing and boosting collections from advance bookings. Moreover, lower
development costs of affordable projects helped to further improve developers' finances.
Thus, in affordable housing, developers saw a solution to their liquidity problem, thereby
leading to the creation of a new market segment.
According to estimates, around 600 million people are expected to make urban India their
home by 2031, a whopping 59% growth over 2011. As an increasing proportion of India’s
population starts participating in its growth story, it brings with it mounting pressure on the
existing infrastructure, which needs to at least keep pace with the growing demand, if not be
ahead of the curve. The current housing deficit in India stands at 19 million units, which, in
the absence of any meaningful intervention, is slated to double to 38 million units by 2030.
95% of this deficit is around the EWS (Economically Weaker Sections) and LIG (Low
Income Group) segments, which technically puts the figure at a staggering 18 million units in
this category (approximately). While this number is huge, there is also a substantial chunk of
upper end of LIG band and lower to middle end of MIG band, which we can say comprises
‘the emerging middle class’, who are also deprived of decent living conditions. The deficit in
this category is approximately 4 lakh units, which, if not addressed, would further aggravate
the proliferation of unplanned and unsustainable urbanization. Statistics show that more than
80% of this category is staying in congested homes.
The lack of available housing options, combined with limited income and minimal access to
home finance for low income borrowers, means that millions of Indian households currently
live in cramped, poorly constructed houses/slum areas/shanties. They lack access to a clean
and healthy environment, with even basic amenities such as sanitation, clean water, sewage,
waste management and electricity often absent. Thus, ‘Affordable Housing’ is an idea
whose time has come, and sooner rather than later, planned sustainable urbanization
will have to be by default and not by choice.

24. 24
INSTITUTIONAL FRAMEWORKFOR
AFFORDABLEHOUSINGDELIVERY IN INDIA
 Public sectorinstitutions -In India, affordable housing is a term largely used in
the urban context. At the national level, the rural housing sector falls within the
purview of the Ministry of Rural Development, while housing and human settlements
in urban areas is the jurisdiction of the Ministry of Housing and Urban Poverty
Alleviation. It is the latter ministry that has spearheaded affordable housing as a
concept and policy. The policy framework for affordable housing is provided by the
National Urban Housing & Habitat Policy (NUHHP-2007), along with the Jawaharlal
Nehru National Urban Renewal Mission (JNNURM-2005), Basic Services for the
Urban Poor (BSUP), Integrated Housing & Slum Development Programme (IHSDP)
and the Rajiv Awas Yojana. The NUHHP 2007 lists a number of objectives that
include urban planning, land availability, special provisions for women, public private
partnerships, management information systems and so on (MoHUPA, 2007). With
respect to affordable housing, it aims to: accelerate the pace of development of
housing and related infrastructure; create adequate rental and ownership housing stock
while improving affordability through capital or interest subsidies; and use technology
to modernize the housing sector for energy and cost efficiency, productivity and
quality, green and intelligent building, and mitigate disaster impacts.
 Private sectorplayers -Affordable housing has traditionally been the purview of
the state; it is only recently that the private sector has entered into building houses for
the lower-middle and middle-class segments. Several factors propelled this
development. The demand slowdown of 2008–09 in the high-end residential real
estate sector led to exploration of diversification options for developers in the

25. 25
affordable segment. Easier availability of land in the suburban areas along with
infrastructural connectivity, availability of facilitating and financing agencies such as
the National Housing Bank, international developmental organizations, international
NGOs, micro finance institutions and private equity players, economies of scale and
first mover advantages have also propelled this interest. From 2009 onwards, real
estate developers have launched projects across Indian cities in locations which are
away from the core central business/secondary business districts where land prices are
affordable. The more prominent developers include Tata Housing (Shubh Griha),
VBHC, Foliage, DBS Affordable Home, Nirman Group, HDIL, TVS Housing,
S.Raheja, Mahindra Life spaces and Usha Breco Realty (Monitor Deloitte, 2013).
Typically, the projects are located 20–25 km from the city centre, cover 15–35 acres
and have 1500–3500 units. The projects are characterized by limited options,
closeness to industrial or commercial hubs, reduced area, low construction cost,
shorter period of construction and provision of basic social amenities. The pre-tax
internal rate of returns (IRRs) in a low cost housing project can range from 40 to 45
percent with gross profit margins of 15–20 percent, which is slightly reduced
compared to the 30–40 percent margins available in high-end real estate projects.
Key Recent Developments to Encourage
Affordable and Low-Cost Housing
1. Indian Mortgage GuaranteeCompany (IMGC) -IMGC is India’s first
mortgage guarantee company set up by NHB (38% stake) in collaboration with
Genworth (36%), IFC and ADB (13% each). A mortgage guarantee, also known as
mortgage insurance, is primarily designed to offer credit protection to lenders.
Lenders can seek a guarantee cover, either partial or full, on its mortgage portfolio
against payment of a fixed premium, determined at the time of taking the cover. The
guarantee can be invoked on the underlying loans turning NPA. The risk transfer to
IMGC (or other mortgage guarantee companies) releases lenders’ capital and enables
higher leverage. India Mortgage Guarantee Company (IMGC) concluded its first
mortgage guarantee transaction for a Rs. 378 mn pool of priority sector housing loans
originated by Dewan Housing Finance Company Ltd (DHFL).
2. Establishmentof CERSAI- The Government of India set up the Central
Registry of Securitisation Asset Reconstruction and Security Interest of India
(CERSAI) under the SARFAESI Act 2002 in April 2011 to have a central database of

26. 26
all mortgages created by lending institutions. The objective of this registry was to
compile and maintain data relating to all transaction secured by mortgages. All banks
and HFCs which fall under the purview of SARFAESI Act were advised to register
with CERSAI and the data in respect of all properties mortgaged in its favor. The
lending institutions were also required to pay fees for uploading of the data. While
such a registry it would have been a deterrent for a borrower to raise multiple loans
against the same property at the same time or raise loans using forged documents and
thus would have help the lenders in better fraud control. However, there have been
challenges in terms of all the participating members not being able to load the
complete data into the central registry as the conversion of historical data into specific
formats is time consuming and requires upgradation of the existing systems of the
lenders. Thus, the system has not been utilised to its potential so far.
3. Credit Risk Guarantee Fund for Low Income Housing- The Credit Risk
Guarantee Fund Trust for Low Income Housing (CRGFTLIH) was setup in May 2012
by the Government of India to address the housing needs of the LIG/EWS segment of
the urban population. While mortgage guarantee companies address the general
default guarantee requirements of housing finance institutions, the CRGFTLIH
specifically addresses the urban LIG and EWS population. The Fund provides credit
default guarantees upto 90% of the loan outstanding for loans upto Rs. 0.2 million and
85% for loans between Rs. 0.2-0.5 million for an upfront guarantee fee of 1% of loan
amount. This would absorb a significant share of the credit losses faced by lenders.
Until September 2013, the Fund had 36 members (19 PSBs, 15 HFCs and 2 RRBs). It
is expected that more lenders would avail the guarantee as the Fund establishes track
record.
4. Additional tax deduction of Rs. 0.1 million for interest on loans upto
Rs. 2.5 million for first time buyers- The Finance Act, 2013 allowed an
additional interest deduction of Rs. 0.1 million for interest on housing loans upto Rs.
2.5 million where the cost of the property does not exceed Rs. 4 million.
5. Lower risk weightageson guaranteedloans and for loans upto Rs. 3
million and LTV upto 75%- NHB has prescribed lower capital allocation for
loans upto Rs. 3 million and LTV upto 75% (Risk weightage of 50%-75% compared
to 100% for other loans) to encourage small ticket loans. Further, loans guaranteed by
IMGC or the CRGFTLIH also carry lower risk weightage depending on the extent of
the guarantee available. The lower risk weightages should ideally allow HFCs to
leverage higher, but dependence on banks for funding and the lack of depth in capital
markets, particularly for HFCs rated below A category are bottlenecks. Further, the
above measures are designed to address credit risks of lending to the low-income
segment and encourage home buying through tax incentives. However, the larger
ALM risks faced by HFCs remain unaddressed.

27. 27
GAP BETWEEN DEMAND AND SUPPLY IN
TERMS OF AFFORDABALITY
As far as housing markets in India are concerned, what is demanded is not produced and what
is produced is not demanded. Several gaps exist on account of the pressure on availability of
land due to increasing population and urban migratory trends. The total land supply has not
increased at the same pace as the growth in the urban population. Also, the heavily regulated
land sector in India has made the cost of transactions relatively high, thereby adversely
affecting the affordability quotient of the poor sections. This presents a challenge for
policymakers, both from the implementation and monitoring perspective, it also poses a
significant opportunity for job creation and an untapped market for housing stock from a
private developer’s perspective. However, low income housing has historically been
perceived as a subject matter under the Government’s domain.
Between the JNNURM effort and state sector schemes in some states, it is estimated that
about two million houses may be constructed for the economically weaker sections of the
populace by the end of the 11th Plan. So while the Government is expected to extend
subsidies, come up with technology solutions, and provide infrastructure enabling
development of housing solutions; the scale of the problem especially when looked at in
conjunction with infrastructure aspects such as water, power, transport, sewage, sanitation
and relevant social infrastructure like schools and health centers, pose a challenge that the
Government alone cannot be expected to manage. All factors considered; greater effort and a
much larger program for housing construction are required.
DRIVERS FOR AFFORDABLE HOUSING IN
INDIA

28. 28
THE WAY FORWARD
Increasing urbanization, a renewed focus on the sector by the Government and rising
income & aspirations are all key demand drivers in the Affordable Housing story.
Against this backdrop, there is potential to accelerate the momentum of ‘right time right
place’ Affordable Housing development across India. An enabling ecosystemcan facilitate
well-planned and Sustainable Urbanization that will adequately meet housing needs of
the urban poor, while leveraging the strengths of key stakeholder groups:
1. Timely, single-window clearances and time bound fast-tracked approvals. Self
certification should be the rule of the game with proper carrot and stick approach - Can
help to significantly reduce project development costs.
2. The development of Affordable Housing Zones, along with the promotion of innovative
construction technology providers co-located with the Affordable Housing projects and
catering to project requirements, can be a win – win solution. This approach can entail
varied benefits, both from the perspective of individual project requirements via speeding
up of supplies, and to the technology provider who can achieve desired scale by catering
RAPID URBANISATION
RISING DEMAND FORHOMES
CULTURE OF HOMEOWNERSHIP
RISING INCOMELEVEL
LOWERINTRESESTRATES ON
HOMELOAN

29. 29
to multiple projects within the zone. New-age construction technology like Pre–Fab can
help speed up the construction process, while ensuring uniform, high quality standards.
3. Reduction in stamp duty, exemption from sales tax, reduction/waiver in registration
charges, VAT and service tax, etc. - All of these typically increase the cost of ownership
by 30%-35%.
4. Review local byelaws like setbacks, parking norms, etc. and fine-tune the same to meet
the requirements of Affordable Housing projects.
5. Reduction/exemption of taxes and duties on construction materials can significantly
reduce construction-related costs.
6. Development of urban infrastructure – Affordable Housing (or any form of housing
development, for that matter) cannot exist in isolation. Parallel focus on urban
infrastructure development (Metro, inter and intra-city highways, mono rail, etc.) is
imperative to make the Affordable Housing proposition a truly wholesome one.
CRITICAL ISSUES IN AFFORDABLE
HOUSING SECTOR
1. Scarcityof land- The high population density, rapid urbanization, and poorly
conceived regulations have created shortage in land parcels capable of development.
This is exacerbated by excessive controls over central districts of cities and
difficulties in land recycling, which results in a push toward the periphery. Land
acquisition has been a thorny issue, giving rise to land mafias and illegal
encroachments, and reducing availability of land at an affordable price.
2. Scarcityof marketable land parcels- Large tracts of centrally located urban
land are owned by public entities such as the railways, ports, and defense authorities.
These are non-marketable pockets, and lend themselves to the proliferation of slums
and squatter settlements as the authorities are often unable to monitor their holdings.
Further, scattered and poorly planned settlements make it difficult to provide land for
mass housing. Property buyers take many factors other than project quality and cost

30. 30
into consideration, such as basic utilities, connectivity, infrastructure and so on. Thus
AH demands adequate supply of well-serviced land and this in turn influences prices
and willingness to pay.
3. Titling issues-As of now, India lacks a robust system to protect land rights. There
are two aspects to land title: first, a formal recognition of property rights by the state
through a system of titles; and second, facilitation by the state, of efficient trade in
rights, through a process of registration. Both of these elements exist in India, but in
incomplete form. First, not all land transactions require registration, for example land
acquisition, court decrees, mortgages, agreements and so on. Second, while Indian
law requires compulsory registration of land sale, the registration authority is not
mandated to verify history or ownership; thus it is the transaction and not the title that
is registered.
4. Rising costs-Bothland and construction costs have increased, compounded by
price appreciation of construction materials and labour. Financing AH is constrained
because of different construction indices and incomes across the country. From the
customer's angle, obtaining finance is difficult even if the customers have regular
incomes when they are employed in the unorganized sector or lack income proof as
required in the loan process.
5. Regulatoryconstraints-Project sanctions can take several years, and need to be
cleared by as many as forty departments across the national and sub-national levels,
including the environment, fire, revenue and water departments, the traffic police and
so on. The consequent time and transaction costs deter many entrepreneurs. Further,
lack of transparent and clear regulation aggravates the situation. For example,
building bye laws, rules for floor space index, and zoning and development plans of
urban local bodies often lack clarity and there are overlapping guidelines.
CREATINGAFFORDABLEHOUSING STOCK
FOR FUTURENEEDS
There is a need for parallel efforts to create additional affordable housing stock to cater to
the future growth of low income segments of the population due to organic growth and in-

31. 31
migration. This can be largely achieved by redirecting private sector construction activity and
capital towards the construction of low cost housing through appropriate policy changes,
regulation and incentives as outlined below:
1. Increase the supply of land available for residential housing which would
involve the following actions:
 Impose a tax on all vacant land in the metropolitan regions around ULBs to
dissuade land hoarding and speculation and bring more land into productive use.
 Simplify the process of conversion of land falling in metropolitan regions from
agricultural to non-agricultural status, especially for those that want to use such
land for creating affordable housing. This conversion should be handled by a
single agency and done within a short, guaranteed timeframe on payment of a
fixed premium linked to ready reckoned rates.
2. Reduce costs and increase profitability levels of affordable low-cost
housing schemes to encourage more private sector players to enter this market to
create the desired housing stock. Specific measures to do this would include:
 Allow higher FSI or TDR benefits for small housing schemes where 80% or more
of the units are small sized (160 to 400 sq feet carpet area) and the selling price is
below a certain ceiling which can vary by zone in each city (e.g. 75% of ready
reckoned value or Rs 1200 per square foot) and be adjusted periodically. This
would reduce the cost of land per built square foot while reducing the possibility
of the benefits simply flowing to land owners in terms of higher land values...
 Reduce or waive (depending on average unit size in a scheme) all central, state,
and local taxes, as well as development premiums charged.
3. Harness market forces that lead to creationof “regular’ housing stock
to co-create affordable housing stock through an expanded use of the
“Accommodation Reservation” mechanism:
 The Accommodation Reservation (AR) mechanism, which has already been
adopted by several states, usually requires creation of small sized units (equal to
10-25% of the total square footage under construction) in any residential
schemes of regular housing on large plots of land (e.g. 2 Hectares or greater).
 These units are either handed over to the ULB (in which case extra FSI is
granted on the plot as compensation) or can be sold in the open market by the
developer themselves.
. 4. Remove barriers to rental housing to promote growth of the
low-costrentalmarket
 States need to enact new rental laws, which accord more rights to property
owners as far as setting rent, retaking possession, and evicting defaulting

32. 32
tenants, which would apply to renters and rental agreements for all new
small sized, affordable properties while preserving the current rules for
current properties and rent agreements.
 Establish special fast-track courts or mediation agencies in all cities that
would speedily settle housing related disputes between tenants and
landlords.
5. Establish a dedicated“Affordable Housing Authority” in cities or the
entire metropolitan regionaround major cities to facilitate the
implementation of the affordable housing strategyin the region. This
entity could be funded through the fee and land/tenement bank collected from regular
construction activity using the AR mechanism specified above. The Affordable Housing
Authority once constituted, would:
 Establish regulations and norms for affordable housing in terms of size,
specifications, and provisioning for O&M.
 Serve as a single window clearance agency for all permissions for AH schemes
in the ULB or the metropolitan region.
 Liaise with the various development bodies and agencies to ensure adequate
provisions for social amenities and physical infrastructure in conjunction with
affordable housing permissions and construction
AFFORDABLE HOUSING IN BUDGET 2016
Affordable housing is the need of the hour and thus it becomes more and more crucial to push
it through government initiatives like Smart Cities, “Housing for All” and AMRUT. But,
these initiatives do not account for the funding or the equity and debt capital required for
setting these affordable housing projects in motion. Hence, some key measures to address
these concerns in the Budget 2016 can provide for the required flow of funds to the
affordable housing sector. Following is affordable housing developments falling under the
purview of Pradhan Mantri Awas Yojna (PMAY):
1. Private equity funds investing in affordable housing would enable channelizing
private and public funds towards providing equity and debt capital to affordable housing
projects.
2. Promote foreign funding in affordable housing projects: DIPP has given away with
the distinction between affordable housing projects and other projects for foreign direct

33. 33
investing recently. The definition should be invoked and should be brought in line with the
PMAY.
3. Lower costof capital for affordable housing developers by the use of the Rs. 10,000
crores startup fund to finance private equity funds as well as startup developers in the
affordable housing segment.
4. Fund low costconstructiontechnologyventures. This can be achieved by
setting up a dedicated fund with the government as the main investor. This particular fund
can also seek funding from the recently announced Rs. 10,000 crores startup fund.
5. Taxrelief / exemption to developers and private equity funds investing in
affordable housing. A tax holiday similar to the ones announced for startups can also be
provided to startup developers in affordable housing.
6. Relief / exemption in taxation for buyers. Such a move will lead to increased
sales numbers led by the relief/exemption benefits if passed on by the developers to the end
customer because of the flexibility created on account of the some extra margins.
7. Credit guarantee schemes forthe affordable housing customers and
projects: The credit guarantee to projects can be restricted to defaults / delays arising from
the approval process and should NOT be provided on cost escalations / sales slowdown.
8. Single-window clearance has been a long sought dream of the real estate sector.
Single window clearance should focus on ensuring not only fast approvals but also on
reducing the uncertainty in approval timeframes. More than any other segment in the Indian
real estate, the thin-margined-affordable housing projects need it the most to make such
projects financially viable
9. Streamlining environmental clearance(EC)can significantly improve the
financial viability of large affordable housing projects. Many affordable housing developers
have been forced to plan small projects in order to avoid EC.
10. Funds for building infrastructure in the satellite cities / towns:Under
this, government should aim at creating financially viable affordable housing projects by
aiming to improve infrastructure in satellite towns/cities where the large land parcels are
available at much cheaper rates. Allocating budget towards setting up an infrastructure
development would prove crucial for the plan to set in motion
. 11. Promote end customers (first time home buyers) and discourage
investors:The Government should confine the tax benefits provided under the Income Tax
Act Sec. 54 (F) on reinvestment of capital gains from sales of residential property to first time
buyers only. This would prevent the bulk buying of affordable housing apartments because

34. 34
such investor activities ultimately lead to the price inflation of these housing units leaving
them financially unviable for the customer.
It is a bit of a paradox that while a basic human necessitylike housing is
becoming increasingly expensive, luxury items such as smartphones and
electronic goods are more and more affordable. The neighbourhood taxi
driver may wield the latestmobile technology, but home might still mean a
compromised solution. And yet, the future holds infinite possibilities. All it
needs for Affordable Housing to become a widespreadreality in India is a
unified and sustainable approach by all stakeholderswith one common
goalin mind – Quality Housing that is truly for all.
CHAPTER 4
HDFC LIMITED AND COMPANY’S PROFILE
Housing Development Finance Corporation Limited (HDFC) is
an Indian financial conglomerate based in Mumbai, India. It was founded on October 17,
1977 as the first specialized mortgage company in India. HDFC was promoted by the
Industrial Credit and Investment Corporation of India.
HDFC is a major provider of finance for housing in India. It is a public limited company
primarily engaged in the business of providing housing finance by creating an institutional
facility for meeting the needs of people for long term finance for purchase/construction of
residential houses anywhere in India. It also has a presence in banking, life and general
insurance, asset management, venture capital and education loans.
HDFC pioneered in individual lending, based on market principles. HDFC today is one of
the largest home loan providers of the country and its success displayed that financing homes
can be a very profitable business.
A leading provider of housing finance in the country, HDFC provides financial solutions to
customers, since it came into existence. Trusted by millions, HDFC is very popular amongst
its wide customer base because of the impeccable service, lucrative features and benefits, and
credibility. Currently, HDFC boasts of a wide network of 378 interconnected offices,
inclusive of 103 HDFC sales offices. The company also houses one office each in Dubai,
Singapore, and London with the purpose of providing home loans to Non Resident Indians.

35. 35
The equity shares of HDFC are listed on Bombay Stock Exchange where it is a constituent of
the BSE SENSEX index, and the National Stock Exchange of India where it is a constituent
of the S&P CNX Nifty.
The HDFC mobilizes savings from the banks and other financial institutions but not from the
household directly, the reason being that it would be very costly to collect saving directly
from the household through a network of local offices. The cost of advertising also would be
heavy. In other words, the HDFC is more like a wholesaler. It depends upon the bank for
tapping the savings. The HDFC funds come from public floats of capital and certificate of
deposits in banks. It is found that on an average a borrower repays about 25% of his income
in installments. Since, the HDFC depends upon the free market funds, it has to function
according to commercial criterion. For this management must be of a high quality and the
risk involved should be a minimum. Therefore, the loans are given upon proof of income, a
high value of collateral security, personal guarantee and conservative pre-payment
conditions. The social purpose is to enlarge capital markets so that a vital range of income
groups is served through a growing proportion to housing.
MANAGEMENT-
HDFC is a professionally managed organization with a board of directors consisting of
eminent persons, professionals who represent various fields including finance, taxation,
construction and urban policies and development. The board primarily focuses on strategies
formulation, policy and control, design to deliver increasing value to stakeholders.
HDFC has a vast staff strength which includes professional from field of finance, law,
accountancy, and engineering and marketing.
ORGANIZATIONAL GOALS
HDFC’S main goals are to-
1. Develop close relationships with individual households
2. Maintain its position as the premier housing finance institution in the country.
3. Transform ideas into viable and creative solution.
4. Provide consistently high returns to shareholder
5. To grow through diversification by leveraging off the existing client base.

36. 36
HDFC FOUNDER
HAMSUKHBHAI PAREK- MAN WITH A MISSION-
Hasmukhbhai Parekh (March 10, 1911 – 1994) was an Indian financial
entrepreneur, writer and philanthropist. He played a role in the development
of Industrial Credit & Investment Corporation of India, now ICICI Bank, founded
the Housing Development Finance Corporation, and in 1992 was awarded the Padma
Bhushan for his contribution to the finance industry in India. The London School of
Economics also conferred on him an honorary fellowship.
He was a true developer banker. His building up HDFC without any government
assistance is itself a brilliant chapter in financial history. His wisdom and warmth
drew people from all walks of life to him, for advice, guidance and inspiration soft
spoken man of few words, he nevertheless held strong and definite views with a quite
conviction.
TARGET SEGMENT OF HDFC LIMITED
1. Salaried/employed
2. Self employed businessman
3. Self employed professionals
4. Agriculturists
5. Self employed people working in organisation
HDFC COMPANY’S PROFILE
HDFC LIMITED OFFERS VARIOUS PRODUCTS TO ITS CUSTOMERS
WHICH ARE CATEGORISEDAS-

37. 37
HDFC HOUSING LOAN PRODUCTS
HDFC housing loan products includes:-
1. Home loan
2. Home improvement loan
3. Home extension loan
4. Plot loan
5. Short term bridging loans
6. Rural housing finance

38. 38
7. Reach loan
1. HOME LOANS- HDFC offers loans to individuals to purchase or construct
houses. Home loans may be applied individually or jointly. HDFC Ltd home loans
available at affordable interest rates, lowest EMI, High Eligibility & low
processing charges with easy procedure of home loan. HDFC Ltd is the biggest
private lender in home loan segment with over 5.1 million home loan customers.
HDFC Ltd extensive distribution network of 378 interconnected offices (including
103 offices of HDFC Sales) with outreach programs to several locations, reaching
out to over 2,400 towns and cities all over India.
PURPOSE
1. Purchase of flat, row house, bungalow from developers.
2. Existing freehold properties
3. Properties in existing or proposed cooperative societies.
4. Self construction
ELIGIBILITY
1. Salaried employees
2. Self employed professionals
3. Self employed business man
4. Applicants can either be resident or non resident
5. Age of applicant cannot be more than 65 years
MAXIMUM LOAN AMOUNT
LOAN AMOUNT MAXIMUM FUNDING
Upto and including Rs 30 lakhs 90% of property cost
Rs 30.01 lakhs to 75 lakhs 80% of property cost
Above Rs 75 lakhs 75% of property cost
INTEREST RATE
Flexible / Floating home loan interest rates: RPLR-16.30%

39. 39
LOAN SLAB INTEREST RATE(% p.a.) RPLR MINUS SPREAD
FOR WOMEN(ANYLOAN
AMOUNT)
9.40 to 9.90 RPLR-(6.90 to 6.40)
ANYLOAN AMOUNT 9.45 to 9.95 RPLR-(6.85 to 6.35)
Repayment options: The loan amount can be repayed in maximum period of 30 years.
2.Home improvementloan-
Home improvement loan are the loans that are taken on a property that has already
been constructed. These loans help to renovate house as and when required and
works in a fashion similar to the home loan. These loans can also be taken to help
furnish house and pay for things like bathroom fittings, fans, furniture, etc.
Thus, home improvement loan facilitates internal and external repairs and other
structural improvements like paintings, water proofing, plumbing and electrical
work , tiling and flooring, etc
PURPOSE OF THE LOAN
HDFC home improvement loan can be used for the following purpose-
1. Internal and external repairs
2. Tilling and roofing
3. Painting
4. Waterproofing
5. Borewel
LOAN AMOUNT
 The payments for the loan maybe spread over a maximum term of 15 years.
 The tenure of the loan is also dependent on the customer’s profile, age of customer at
maturity of loan, age of property at loan maturity, depending upon the specific
repayment scheme as may be opted and any other terms which may be applicable
based on prevalent norms of HDFC.
MAXIMUM LOAN AMOUNT

40. 40
LOAN AMOUNT MAXIMUM FUNDING
Upto and including Rs 30 lakhs 90% of property cost
Rs 30.01 lakhs to 75 lakhs 80% of property cost
Above Rs 75 lakhs 75% of property cost
HDFC HOME LOAN IMPROVEMENT LOAN
INTREST RATES:
RPLR-16.30%
LOAN SLAB INTEREST RATE(% p.a.) RPLR MINUS SPREAD
FOR WOMEN(ANYLOAN
AMOUNT)
9.40 to 9.90 RPLR-(6.90 to 6.40)
ANYLOAN AMOUNT 9.45 to 9.95 RPLR-(6.85 to 6.35)
3.HOME EXTENSION LOAN
Home extension loan facilitates the extension of an existing dwelling unit. This type of loan
makes it convenient to extend or add space to home. Thus, a loan given to fund your needs
for expanding your existing house is home extension loan. The expansion could include new
rooms, aesthetic improvements, or even converting an existing balcony into an enclosed
space.
PURPOSE
This loan is specifically for the extension purpose. Be it an additional room, a
larger bathroom or even enclosing an open balcony.
HDFC Home ExtensionLoan amount – The customer is eligible to borrow upto
85% of the cost of the expansion
Loan Term
The maximum term of payment of loan amount is 20 years. The tenure of the loan is also
dependent on the customer’s profile, age of customer at maturity of loan, age of property at
loan maturity, depending upon the specific repayment scheme as may be opted and any other
terms which may be applicable based on prevalent norms of HDFC.

41. 41
Maximum Loan Amount
LOAN AMOUNT MAXIMUM FUNDING
Upto and including Rs 30 lakhs 90% of property cost
Rs 30.01 lakhs to 75 lakhs 80% of property cost
Above Rs 75 lakhs 75% of property cost
INTRESET RATES
RPLR: 16.30%
LOAN SLAB INTEREST RATE(% p.a.) RPLR MINUS SPREAD
FOR WOMEN(ANYLOAN
AMOUNT)
9.40 to 9.90 RPLR-(6.90 to 6.40)
ANYLOAN AMOUNT 9.45 to 9.95 RPLR-(6.85 to 6.35)
3.PLOT LOAN
HDFC,S plot loan product enables its customers to acquire the land so that he can build his
dream home into reality. Owning a plot of land gives the liberty to construct a structure, on it,
which is uniquely one’s own. Human beings want to construct a house or building that can
cater to their needs and taste. Also referred to as land loans, plot loans are a one of its kind
product offered by banks to provide financial assistance to customers for buying a plot/piece
of land. Most people often confuse plot loans with home loans. This is quite prevalent mostly
because home loans provide financial assistance for the purchase of a house or flat. The
house or flat could either be a pre-existing one or can be constructed newly. Though the
purpose of offering plot loans is similar, but the primary difference, between the two, lies in
the fact that plot loans are availed for the purchase of the land on which the house or
apartment is eventually constructed.
HDFC offers innovatively designed plot loan scheme with various lucrative benefits, and
affordable rates of interest. This type of loan enables borrowers to buy a plot of their choice
to construct a structure, on the same, according to their requirement.
PURPOSE
The loan is provided with the aim of fulfilling the following purposes –
1. Purchase of a resale plot
2. Purchasing a land through direct allotment

42. 42
3. If you have an outstanding loan, which has been availed from another bank/financial
institution, then you can transfer the same to HDFC.
MAXIMUM TERM-15 years subject to customers retirement age.
MAXIMUM LOAN AMOUNT
LOAN AMOUNT MAXIMUM FUNDING
Upto and including Rs 20 lakhs 90% of property cost
Rs 20.01 lakhs to 75 lakhs 80% of property cost
Above Rs 75 lakhs 75% of property cost
INTEREST RATE
LOAN SLAB INTEREST RATE(% p.a.) RPLR MINUS SPREAD
FOR WOMEN(UPTO 30 LAKHS) 9.40 to 9.90 RPLR-(6.90 to 6.40)
FOR OTHERS(UPTO 30 LAKHS) 9.45 to 9.95 RPLR-(6.85 to 6.35)
FOR WOMEN ABOVE 30
LAKHS
9.65 to 10.15 RPLR-(6.65 to 6.15)
5.SHORT TERM BRIDGING LOAN-
Short term bridging loan is the loan that makes customer realize their dreams of buying a
bigger and better home and give them time to sell their existing property to payoff the loan.
This is a short term loan to help customers with the interim period between the sale of their
old homes and the purchases of the new home. Customers repay the loan by paying monthly
installment or interest on the loan with the lump sum payments within 2 years. Hence,
customers get 2 years to sell the property to repay the loan.
Loan amount – The customer is eligible to borrow upto 90% of the cost of the new
property
Term: The maximum term for bridge loan is 2 years.

43. 43
Repayment: The customer can repay the interest amount for the first two years and the
entire principal as a lump sum payment at the end of two years.
MAXIMUM LOAN AMOUNT
Upto 75 lakhs 80% of property cost
Above Rs 75 lakhs 75% of property cost
INTEREST RATE
RPLR:16.30%
LOAN SLAB INTEREST RATE(% P.A.) RPLR-SPREAD
Any loan amount – Residential
Properties
12.30 RPLR-4.00
Any loan amount – Commercial
Properties
13.15 RPLR-3.15
6.RURAL HOUSING FINANCE
HDFC’S rural housing finance is the housing loan in rural areas to progressive
agriculturists for properties in rural and urban areas. There is no compulsion to mortgage
agricultural land to take the loan. HDFC Rural Housing Loan Products, customized and
categorized to suit agrarians with diverse income background. It is all based on how much
land you own (or leased), what are the crops you cultivate among others. Even salaried
people and entrepreneurs can apply for this. There is no need for income tax return on
rural housing loan.
FEATURES
 HDFC Rural Housing Loans take an inclusive approach as they have products that are
exclusively designed loans to Farmers, Planters, Horticulturists, and Dairy Farmers.
 Customer can buy an under construction, new or a used residential property up for sale
in the rural and city areas.
 Customer can avail it for building your house on a freehold or leasehold housing plot
in the rural and urban regions.
 He may use this loan to renovate or enhance your current home in numerous ways
including tiling and flooring, internal and external plaster and painting etc.
 For agriculturists, no hypothecation of their agricultural land is needed to get a house
loan.

44. 44
 T here is no compulsory requirement of Income Tax Returns from farmers applying for
the HDFC Home Loan.
 Salaried individuals and self-employed can also apply for the same.
 Longer loan terms of up to 20 years are available agriculturists.
LOAN TERM
The maximum period of repayment of a loan shall be upto 30 years for the Telescopic
Repayment Option(applicable only for the Salaried / Self Employed segments) under the
Adjustable Rate Home Loan. For all other Home Loan products, the maximum repayment
period shall be upto 20 years.
Maximum Loan Amount
LOAN AMOUNT MAXIMUM FUNDING
Upto and including Rs 30 lakhs 90% of property cost
Rs 30.01 lakhs to 75 lakhs 80% of property cost
Above Rs 75 lakhs 75% of property cost
INTEREST RATES
RPLR-16.30%
LOAN SLAB INTEREST RATE(% p.a.) RPLR MINUS SPREAD
FOR WOMEN(ANYLOAN
AMOUNT)
9.40 to 9.90 RPLR-(6.90 to 6.40)
ANYLOAN AMOUNT 9.45 to 9.95 RPLR-(6.85 to 6.35)
7.HDFC REACH
HDFC offers customized home loan products on a platter to help customers buy
a new or second hand house through its HDFC reach product. It allows
customers to Constructhouse on a freehold or lease hold plot or on a plot
allocated by any Development Authority and transfer due house loan amount
gotten from some other bank or financier to HDFC. It allows to Enhance or
renovater house in numerous ways such as tiling and flooring, interior and
exterior plaster and painting etc.
Spreading or adding spaceto your house suchas building more rooms.
FEATURES

45. 45
 HDFC offers customized home loan products on a platter to help customer buy a new
or second hand house.
 To construct your house on a freehold or lease hold plot or on a plot allocated by any
Development Authority.
 To enhance or renovate house in numerous ways such as tiling and flooring, interior
and exterior plaster and painting etc.
 Spreading or adding space to your house such as building more rooms.
 Home loans and plot loans up to INR 25 lacs for salaried people with a minimum
earning of INR 10,000 per month and for self-employed people with at least INR 2 lacs
earnings per annum.
 Reasonable interest rates beginning from 11.80 percent per year.
ELIGIBILITY
Customer may apply separatelyor jointlyfor any of the Home and Plot Loan products.
All future owners of the home will be expectedto be co-applicants. But there is
requirement for all co-applicants to be co-owners. Usuallyco-applicants are closefamily
members (like spouse, parent or child).
HDFC Reach Home Loan Tenure:
 The maximum duration permitted to completely repay and settle the loan is 20 years.
 Loan settlement will not normally extend post your retirement age (if you are
employed) or if you have hit age 70, whichever happens earlier.
 The term of the housing loan is also based on parameters like the client’s risk profile,
age at the time of mortgage maturity, age of the property itself when the loan matures
and repayment scheme offered.
Maximum Loan Amount
LOAN AMOUNT MAXIMUM FUNDING
Upto RS 35 LAKHS Salaried Individuals, for Reach Home loans -
80% ofthe property cost
Non Residential Premises Loans and Plot
Loans - 60% ofthe property cost
Upto RS 35 LAKHS Self-Employed Professionals & Non
Professionals, for Reach Home Loans - 80% of
the property cost
Non Residential Premises Loans and Plot
Loans - 60% ofthe property cost

46. 46
Above Rs 75 lakhs 75% of property cost
INTEREST RATE
RPLR:16.30%
LOAN SLAB INTEREST RATE(% P.A.) RPLR-SPREAD
UPTO 35 LAKHS(SALARIED) 11.55 or 12.55 RPLR-(4.75 or 3.75)
UPTO 35 LAKHS(SELF
EMPLOYED)
11.55 or 12.55 RPLR-(4.75 or 3.75)
HDFC’S NON-HOUSING LOAN
PRODUCTS
HDFC’S NON HOUSING LOAN PRODUCTS INCLUDES THE
FOLLOWING-
RESIDENTIAL PROPERTY
1.Loanagainstproperty- Loan against property is a Secured Loan,
which means that the property acts as security for the loan. In case of loan

47. 47
default the property can be attached to the bank and could be auctioned or sold
to recover the loan amount due.
LAP is precisely what the name implies – a loan which can be availed by
keeping a property as security. Banks and financial institutions offer this loan
against a property, which can either be a residential/commercial building or a
piece of land. The loan can be availed by mortgaging the property with the
bank. The loan amount depends on the type of property and in most cases the
market value of the property is considered before disbursing the loan, generally
commanding about 40% to 60% of the actual market value.
FEATURES
 Multiple purposes – the loan against property can be availed for multiple purposes. It
could be for business, education, medical needs, property purchase, marriage or any
other personal or professional need.
 Longer tenure – Loans against property can be taken for tenure periods ranging up to
15 years or more, enabling the borrower gets sufficient time to clear the loan.
 Lower interest rates – Loans against property come at lower interest rates compared
to normal home loans, where the interest rate can be as high as 20%.
 Easy repayment – Borrowers can choose from multiple EMI options to choose one
which best suits their repayment capacities.
 High upper limit – A borrower can avail loans upto Rs 10 crore and more against
property, if the property meets the required criteria.
 Property Type – Any property type can be kept as security to avail this loan. It could
be a residential or commercial property or just an empty plot.
ELIGIBILITY
The eligibility criteria to avail a loan against property vary from institution to institution, but most
of the basic criteria remain the same. The basis for most loans against property relate to the
profession of the borrower. The applicant should be either one of the following to be eligible for a
loan against property.
SalariedIndividual

48. 48
The individual should be a permanent employee with the government or a reputed company.
The minimum age to avail loan against property is generally around 24 to 25 years.
Professional
The applicant can be a professional in any field (doctor, engineer, architect, chartered accountant,
etc).
The maximum age of the applicant can be 65 years.
Self-Employed Individual
The individual should be a regular at filing income tax returns.
The individual should have been in the same business for a minimum number of years – generally
between 3 to 5 years.
Property eligibility
The property in question should be free from legal tangles and should have clear titles registered
in the name of the applicant.
LOAN TERM- Maximum period of 15 years
Maximum Loan Amount
Existing HDFC Customers
The principal outstanding on all existing loans and the LAP being availed should not
cumulatively exceed 60% of the Market Value of the mortgaged property as assessed by
HDFC.
New Customers
The LAP being availed should not, generally, exceed 50% of the Market Value of the
property, as assessed by HDFC.
INTEREST RATES
RPLR:16.30%
LOAN SLAB INTEREST RATE(% p.a.) RPLR MINUS SPREAD
RESEDENTIAL PROPERTY 10.60 to 12.60 RPLR-(5.70 or 3.70)
COMMERCIALPROPERTIES 11.10 to 12.60 RPLR-(5.20 or 3.70)
2.TOP UP LOANS-A top up loan is basically a loan that allows you to avail a loan
amount on top of your home loan. The usual loan tenure is about 15years and is often offered
only after a 12 months into the home loan disbursal, as this gives a fair idea about repayment

49. 49
track record, which means no defaults down the line and this also increases loan eligibility of
the customer.
LOAN TERM- MAXIMUM TERM OF 15 YEARS
MAXIMUM LOAN AMOUNT
 The maximum Top Up Loan that you can avail of is equivalent to your originally
sanctioned loan amount of all the Home Loans put together or Rs. 35 lacs, whichever is
lower.
 This is further subject to the cumulative outstanding loans plus the Top Up being offered
not exceeding an overall cap of 80% for cumulative exposure up to Rs. 75 lacs & 75% if
the cumulative exposure is over Rs. 75 lacs of the Market Value of the mortgaged
property, as assessed by HDFC.
INTEREST RATES
LOAN SLAB INTEREST RATE(% p.a.) RPLR MINUS SPREAD
TOP UP LOAN FOR EXISTING
CUSTOMERS
9.80 TO 10.30 RPLR-(6.50 TO 6.00)
TOP UP WITH BALANCE
TRANSFER LOAN
9.45 TO 9.95 RPLR-(6.85 TO 6.35)
NON-RESEDENTIALPROPERTY
1.PLOT LOAN- Plot loan is a type of loan that enables borrowers to buy a plot of
their choice to construct a structure, on the same, according to their requirement. HDFC
offers innovatively designed plot loan scheme with various lucrative benefits, and affordable
rates of interest.
Plot loans are a one of its kind product offered by banks to provide financial assistance to
customers for buying a plot/piece of land. Most people often confuse plot loans with home
loans because home loans provide financial assistance for the purchase of a house or flat. The
house or flat could either be a pre-existing one or can be constructed newly. Though the
purpose of offering plot loans is similar, but the primary difference, between the two, lies in
the fact that plot loans are availed for the purchase of the land on which the house or
apartment is eventually constructed.

50. 50
Loan tenure can be spread out to a maximum period of 15 years.
MAXIMUM LOAN AMOUNT
LOAN AMOUNT MAXIMUM FUNDING
Upto and including Rs 20 lakhs 90% of property cost
Rs 20.01 lakhs to 75 lakhs 80% of property cost
Above Rs 75 lakhs 75% of property cost
INTEREST RATE
LOAN SLAB INTEREST RATE(% p.a.) RPLR MINUS SPREAD
ANYLOAN AMOUNT 12.35 TO 13.60 RPLR-(3.95 TO 2.70)
DEPOSITS
HDFC Ltd. is one of India’s top housing financiers and has a marked presence all over the
country with operational segments like banking, insurance, wealth management etc. As part
of its retail offerings, HDFC Ltd. provides appealing savings solutions. These come in the
form of fixed deposit accounts. HDFC enjoys good credit rating assigned to them by two
credit rating companies, CARE and Fitch Ratings India Pvt Ltd. They have been assign a
CARE AAA for their fixed deposits and a PR1+ for their Certificate of Deposit programme.
HDFC fixed deposits have also received a credit rating of AAA from Fitch thus making them
a safe place to invest in.
FEATURES
 Highest safety - AAA rating from both CRISIL and ICRA for 21 consecutive years.
 Attractive and assured returns.
 Impeccable service through a network of over 378 offices across the country.
 A wide range of deposits products to choose from.
 Prompt doorstep assistance through our key partner network.

51. 51
 Quick Loan Against Deposit facility.
DEPOSITS INCLUDES FIXED DEPOSITS FOR
 INDIVIDUALS
 TRUSTS
1.INDIVIDUALS-
Interest Payment Options
HDFC Ltd. has the following interest payments options-
 Monthly Income Plan
 Non-Cumulative Plan
 Quarterly
 Half Yearly
 Annual Income Plan
 Cumulative Option
PAYMENT
OPTION
INCOME
ACCRUED
RECOMMENDED
CATEGORY
INTEREST
CREDITED
INTEREST
RATES
Monthly
Plan
Consistent
monthly
income
Retired persons,
Housewives, Senior
Citizens
Interest
credited
through ECS
directly to
your account
Fixed and
Variable
rates of
interest
available
Non-
Cumulative
Plan
Periodic
income.
Credited
either on
quarterly or
half- yearly
basis
Ideal for funding
quarterly or half-
yearly monetary
requirements
Interest
credited
through ECS
directly to
your account
Fixed and
Variable
rates of
interest
available
Annual Regular Perfect choice to Interest Fixed and