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Sarva UP Gramin Bank’s Intervention and Experience in Rural Housing

This case study analyzes the rural housing scenario in Uttar Pradesh and the intervention and experience of Sarva UP Gramin Bank in providing finance for rural housing. It examines the challenges and opportunities in rural housing finance and suggests strategies for improvement.

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Sarva UP Gramin Bank’s Intervention and Experience in Rural Housing

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  1. Sarva UP Gramin Bank’s Intervention and Experience in Rural Housing A-rural housing scenario B- Sarva UP rural finance initiatives Y P Issar

  2. A. RURAL HOUSING SCENARIO • RURAL POPULATION • RURAL HOUSEHOLDS • RURAL HOUSES supgb

  3. 2.Rural Households • Rural households were • 9cr, • 11 cr and • 14 cr • in 1981, 1991 and 2001 respectively supgb

  4. Rural Population supgb

  5. 3. Rural houses……. • Average area of a rural house 64 sqm • 35% app. had over 50 sqm area • -10% app. had over 100Sq.m area (In 1993 , this percentage was 15%) • About 32% were constructed more than 20 years ago. • Land holding per capita in rural areas higher than urban areas- construct on their own land. • 95.4% own their homes supgb

  6. 3. Rural houses……. • Gap in desired and actual quality • Houses classified as pucca, semi pucca, kutcha • Share of pucca houses increased from 18.5% to 35.4% from 1971 to 2001 68.5 % live in one or two room houses -39.85 %in one room houses • For average household of 5.2 persons, house size is small. supgb

  7. 3. Rural houses…….. • Structural condition of rural houses-2001 • 5.81 cr(45%)and 0.25cr(42.2%) of residential and nonresidential houses in good condition • 6.28 cr(48.7%)and 0.32cr(53.3%) of residential and nonresidential houses classified as livable • 0.81 cr(6.3%)and 0.03cr(4.5%) of residential and nonresidential houses in dilapidated condition supgb

  8. 3. Rural Houses……. • Exclusive Amenities-2001 • Access to safe drinking water- 80.5% ( 26.3% in 1981) • Access to exclusive toilets- 26.3% • Electricity connection-43% (14% in 1981) supgb

  9. B. Sarva UP- rural finance initiatives • Sarva UP Gramin bank-an introduction • Capital plus reserves=Rs 142 cr • Deposits=2630, advances=1500 cr • Net profit(PAT) = Rs 26.47 cr • Deposit/advances accounts 22 lakh/3lakh respectively • Gross/Net NPA 2.89%/0% respectively • 295 branches/1200 persons/13 districts in UP • CASA =83% second highest amongst all RRBs • Cost of deposits: 4.16% supgb

  10. Our rural housing finance portfolio • Our cumulative disbursements= • 1648 accounts Rs1882 lakhs • Current year disbursements= • 305 accounts Rs 515 lakhs • Outstandings • 1417 accounts Rs 1317 lakhs supgb

  11. Schemes for financing rural houses • GJRHFS • FINANCING TO Kisan Credit Card (KCC) holders • Other borrowers • Most of the loans are linked with the holding of agriculture land supgb

  12. Amount of Loan • GJRHFS • Construction of new dwelling units=up to Rs 5.00 lakh • Most of loans given up to Rs 2.00 lakh • Up gradation/major repairs= up to Rs 1.00 lakh • No loans given under this • KCC holders-Rs 2.00 lakh in addition to crop loan • Few loans given under this • Others= need based supgb

  13. Loaning Powers • Rural sites • up to Rs 5.00 lakh by branch managers • up to Rs 30.00 lakh by higher authorities supgb

  14. Rate of Interest(%) • Period of loan : floating rate fixed rate • Up to 5 years 9.50 10.00 • Up to 15 yr 9.75 10.25 • Max= 10.50 % up to Rs 30 lakh supgb

  15. Other charges • Processing fee: • 1% of loan amount for loans above Rs 25000 • Issue of balance /interest certificate: • Rs 50 per certificate supgb

  16. Repayment • GJRHFS • Maximum 15 years • Mostly for 10 years • Others • Max 25 years • Moratorium period: • Maximum 18 months supgb

  17. Margin/Security • Margin: • Fifteen percent of cost of construction • Security • Primary: mortgage of the house /hypothecation of other assets • or • Collateral: Regd mortgage of agriculture land supgb

  18. UP Agricultural Credit Act 1973 • Construction/repair/extension of a house on abadi land in rural area for personal use shall be deemed as an agriculture purpose, for the purpose of this act supgb

  19. Other aspects • Reasonable growth • Limited to few pockets • So far low focus on this activity • Lack of awareness amongst public • Farmers using highly subsidized (5%) KCC funds for housing • Not covering non farmers/salaried class/low income/disadvantaged groups • Need product differentiation as per segments supgb

  20. Other aspects …. • Need to have specialized loan processing manpower • High potential available in the command areas • Average amount per loan to be enhanced • Proposing housing finance hubs at Noida/Ghaziabad/Meerut/Jhansi • Proposing score based model for sanctioning to reach scale supgb

  21. A few suggestions • Application of interest be allowed up to annual basis depending on the harvesting of crops in stead of monthly basis as recently allowed in gold loans. • Asset classification norms for rural housing loans be allowed as applicable to Agriculture advances as the repayment is mostly based on proceeds of crops. supgb

  22. A few suggestions…… • Clean housing loans up to Rs 50000 be allowed for those having assured income eg salaried /self employed who have no other assets to mortgage. • A Credit Guarantee Scheme for small housing loans can help to cover larger number of low income households. • 1991 census limit of 50000 population be shifted to 2001 census base with higher population level. supgb

  23. A few suggestions……. • GJRHS be given common publicity in vernacular press • NHB refinance be allowed on portfolio basis removing loan wise clauses from Memorandum of Agreement especially for small loans up to Rs 10 lakhs supgb

  24. A thought • With 96 % home ownership, rural people are investing short term funds for housing sector. • More rural housing finance can help have major impact on their life styles. supgb

  25. Thank you supgb

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