State-level booster for rural housing finance ahead

 Rural housing finance may get a leg up with state governments planning to amend their respective legislations which will enable borrowers to mortgage their farms for purposes other than agriculture.

 Current state legislations, except in Maharashtra, did not permit using agricultural land as a collateral for housing mortgages.

 Bankers, however, said that there was some movement with states like Uttar Pradesh, Punjab and Haryana planning amendments. Maharashtra also amended its law last year.

 Of the 19.4 million shortfall in dwelling units in the country, nearly 16 million is estimated to be in rural areas.

 Though credit is being made available through the Golden Jubilee Housing Scheme operated by the National Housing Bank since 1997, banks are wary to lend to farmers without adequate security to enforce in case of defaults in repayment of dues.

 Housing finance companies and banks were shy to lend to farmers for construction of dwelling units despite NHB extending the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to 23 HFCs registered with it.

 NHB officials, however, said though legal hindrance was often cited as the sole reason for providing housing loans to farmers, banks did not want to lend to these sections.