Housing Minister says loan scam will not hit sector

The Minister of Housing and Urban Poverty Alleviation, Ms Kumari Selja, has said that last week's bank scam would not impact growth of housing sector in India.

Speaking to newspersons on the sidelines of Royal Institution of Chartered Surveyors conference on affordable housing, Ms Selja, however, asked financial institutions to be cautious and follow procedures while lending.

“The RBI and other regulators are there and I am sure these things will be looked into. Financial institutions have to lend… but they have to be very careful who they lend to, and people in key positions have to see to it that they are more responsible in giving out loans,” the Minister said.

Asked if the ‘bribe-for-bank-loan' scandal would nudge banks to clamp down on loans to realty sector, the Minister said that financial institutions have to ensure that proper regulations are in place so the real beneficiaries do not suffer. “Financial institutions should always be very cautious no matter which sector they lend to… after all, (it is) public money that has to be accounted for,” Ms Selja said.

Evolving nation

The Minister further stated that the scam would not impact the growth of the housing sector. “Not at all… there are other players (in the market) who are doing their work,” she pointed out.

“Our country is evolving at such a pace that systems have to be improved all the time and we should take it as a kind of indicator, rather than let it taunt us.”

The Minister, who released the RICS report on ‘Making affordable housing work in India', said ushering financial inclusion for the poor remained a challenge.

“The poor face the problem of access to housing finance. Financial institutions are not able to focus on them as much as needed. Even people with incomes cannot offer adequate security and so financial institutions see it as a risk,” the Minister said.

Govt intervention

Meanwhile, the RICS report has sought Government intervention in a number of areas to tackle the housing shortage, estimated at 26 million homes by 2012. The report outlined the need for national and State level targets for housing and strict monitoring of outputs.

It has suggested that the traditional land auctioning process be substituted by ‘reverse tendering'.

“Under this model, the Government would provide land with all approvals and pre-construction formalities in place to the developer who bids for the minimum amount of land required as compensation for development of pre-committed EWS, LIG and MIG units,” it has said.

It also recommended that the housing microfinance provided by NGOs and specialist finance agencies should be encouraged by the State, in part through provision of capital.

Source : The Hindu Business Line