The Indian Housing Finance Industry At Crossroads
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Case Details:
Case Code : FINC019
Case Length : 15 Pages
Period : 1970 - 1992
Pub. Date : 2002
Teaching Note :Not Available
Organization : Indian Government
Industry : Financial Services
Countries : India
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FINC019) click on the button below, and select the case from the list of available cases:
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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An Unwelcome Development Contd...
This could, in turn, negatively affect the housing, construction and engineering industries. The housing finance industry was thus in a state of uncertainty in early February 2003. Both the customers and the companies involved hoped that the panel's recommendations would not be accepted (or accepted only partially).
Background Note - The Indian Housing Finance Industry
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Since the 1970s, the Indian government had given special emphasis to the housing industry and made providing housing one of its main objectives. However, due to the scarcity of finance, owning a house remained a distant dream for the average Indian; even a lifetime's earnings and investments were not enough to fund the purchase of a house.
As a result, even by 2001, the country faced a shortage of 19.40 million dwelling units. The housing finance industry emerged as the answer to the problem of housing by providing finance to individuals planning to own a house (Refer Exhibit II for information about the concept of housing finance).
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Till then, banks had offered personal loans for properties. But these loans were restricted to bank and government (public sector) employees. Private sector employees had to undergo a lot of hardship to obtain housing loans.
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To take care of this problem and to boost investment in the housing industry, the government established the Housing Development Finance Corporation Ltd (HDFC) in 1977.
The objective of HDFC was identified as 'promoting home ownership by providing long-term finance to households for their housing needs.'
During the 1980s and 1990s, increased urbanization and the migration of the rural population to the cities resulted in heavy demand for housing. This created a great need for housing finance... |
Excerpts >>
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