 "One size fits all doesn't work in affordable housing: Expert at BS IMLC")
India Mortgage Leadership Conclave 2024: One size does not fit all in affordable housing due to differences in geography, land costs, and construction costs, said T Adhikari, managing director and CEO of LIC Housing Finance, on Wednesday.
During a panel discussion with Manojit Saha, banking editor of Business Standard, at the third edition of the India Mortgage Leadership Conclave 2024 in Mumbai, Adhikari stated, "I personally believe there needs to be a rethinking of affordable housing. The affordable housing cap is set at Rs 45,00,000. There is also a carpet area cap of 60 square meters in urban conglomerates in all major cities and 90 square meters in others. The underlying issue, in my opinion, is that we do not need to have various caps in different cities.
"If the government needs to reconsider it, it should be limited to the size of the dwelling unit. So, the rates could be higher in Mumbai or lower in cities such as Lucknow and Jaipur. I think that would make it more equitable and fair," he added.
On affordable housing, Shantanu Rege, managing director and CEO of Mahindra Rural Housing Finance, stated that there is a need to simplify. In addition, there is a need to reflect on how the regulator looks at it. The regulator is keen that the focus of the housing finance market is smaller ticket loans. But nobody is doing as much below Rs 25,00,000 loan and that is where pent-up demand lies.
On CLSS or Credit Linked Subsidy Scheme, making a comeback and the issues surrounding it, Lakshminarayanan Duraiswamy, managing director of Sundaram Housing Finance, stated that the CLSS scheme was a huge success largely due to the incentives that they provided rather than structurally how it was intended in the first place.
CLSS was another scheme that had several complexities built into it. A consumer walks in and says- I want to buy a house here- but you don't know if that house or project in that pin code qualifies for CLSS or not, he said.
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He also noted that instead of providing monetary incentives, the CLSS 2.0 scheme should address the core causes for moving people back into affordable housing.
Ravi Subramanian, managing director and CEO of Shriram Housing Finance, said that if the government comes up with CLSS 2.0, there are two things that need to be taken care of. "First, the scheme has been bastardised a lot in the sense that there are a lot of people who should not be getting the benefit but who have gotten the benefit; they do not necessarily belong to the EWS and LIG segments of society, but they belong to the upper classes. They still have the benefit because of some rogue housing finance company trying to work around the math. The government needs to plug the gap; otherwise, half the money going into halves doesn't make any sense at all."
The second thing, according to Subramanian, is that they should make it easier to claim and administer than it already is.
Adhikari agreed with Subramanian, saying that if any housing financing organisations or banks try to bastardise the scheme, the government should come down hard on them.