Housing Finance scandal will not malign the real estate sector : Kumari Selja

However cautions financial institutions not to lend liberally
New Delhi: The Minister of Housing and Urban Poverty Alleviation, Ms Kumari Selja recently announced that last week’s bank scam would not impact the growth of the housing sector in India.
Speaking to newspersons on the sidelines of Royal Institution of Chartered Surveyors conference on affordable housing, Ms Selja, however forewarned financial institutions to be cautious and follow due procedures while lending.
She has assured that the RBI and other regulators are investigating the issue & devising new strategies to ensure that such financial scams are not repeated in future. She also stressed on the fact that since financial institutions are bound to lend, they must continue to do so, but with adequate precautions & verifying all aspects of the loan to be given out. Moreover, she emphasized that people holding pivotal portfolios have to bear responsibility for all financial transactions.
Speaking on the ‘bribe-for-bank-loan’ scandal she disposed off all speculation regarding whether banks would curtail loans to the realty sector. However, the Minister added that financial institutions have to ensure that proper regulations are in place so the real beneficiaries do not suffer.
The Minister further stated that the scam would not impact the growth of the housing sector. Being confident of the potential of this sector, she claimed that the country is making impressive strides. The Minister, who released the RICS report on ‘Making affordable housing work in India’, said ushering financial inclusion for the poor remained a challenge. She mentioned that it is the low-income groups who face the problem of access to housing finance. Financial institutions are not able to adequately focus on them. Even people with decent incomes cannot offer adequate security and so financial institutions see it as a risk
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, the report states.
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.