NABARD - Student Internship Scheme 2016-2017 - page 39

• DCCB, Harakh branch faced loss in last financial year due to high rate of NPA.
• Two group loans under microfinance - One SHG financed by Gramin Bank of Aryavart for Rs.10,000
and the other financed by Sonanata Microfinance Limited for housing purpose of Rs.12,000,
indicating demand for housing finance even for the very low income group people.
Major Recommendations:
1. Filling up the Gap between Demand and Supply of Housing Credit:
The number of housing loans in the two districts was very less (around 20) due to high interest rate
& cumbersome process, still the rural households want to get credit at a reasonably lower rate of
interest. The focus should be given on current housing conditions, family size,asset holding, income
and occupation, alternate sources of income and other indicators to assess the actual housing credit
2. More Penetration of Credit Institutions:
Lending institutions like banks and HFCs fail to assess low segment housing finance market and
supply credit to meet their credit need. There is grossly underestimation of size of low segment
housing finance market. So the penetration of these institutions needs to be more focused in the
rural areas.
3. Objective Method of Loan Appraisal:
It is suggested that loan limit/slab may be fixed on the basis of the total income of the family or the
total land holding as in case of KCC which may help in increasing credit flow to these areas. For
example, for a household with 4 acres of land, loan of
80, 000 could be given by taking the identity
proof of the person.
4. Providing Credit Through MFIs, JLGs and NGOs:
4.1 The microfinance institutions and NGOs were not very active, but this could be a very effective way
of providing credit to the rural areas, particularly by involving small amount of loans and better
recovery performance could be seen by these institutions.
4.2 More focus should be given on providing credit for rural housing through Self Help Groups and Joint
Liability Groups in which the members bear each other’s responsibility thereby helping in better
recovery of loans and more people could be accessed.
5. Housing Subsidy:
Subsidy should be provided to poor households on the basic housing material like cement, bricks etc
to make the loan cheaper for a rural households to construct their houses. Further, interest subsidy
on the housing loans for those repaying in time may also be provided.
6. Flexibility in Repayment of Loans:
The banking institutions should be little flexible in repayment instalments of households whose
income source is only agriculture that fluctuates and depends on nature.
7. Simplification of Legal Formalities:
The rural households did not avail housing loans due to complicated process of documentation and
legal formalities. Due to this they have to bear overhead cost of Rs.2,000 to 3,000 for a loan amount
of Rs.1 lakh. So there is a necessity for simplifying these formalities.
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