The Reserve Bank of India has established a systemic framework for specialized mortgage finance in the country and the housing finance sector has been witnessing a steady growth of over 25% in the past few years. This article analyzes the history of Residential Mortgage Backed Securities (RMBS) in India, recent developments, and the initiatives to strengthen the market.
The
Indian housing finance market has been an underdeveloped
one for many years, though there has been good growth
in recent years.The
proportion of households living in permanent structures
in India has risen from 41.7% in 1991 to 51.8% in 2001,
but still a high proportion, i.e. 38.5% of households
still lives in one-room structures in 2001, which was
40.5% in 1991. These statistics show that housing is
still an underdeveloped area despite various policy
initiatives.
One
of the reasons stated for this underdevelopment is the
absence of a vibrant secondary market, wherein the housing
loans can be traded and finance can be raised. In this
article, the history of Residential Mortgage Backed
Securities (RMBS) in India, recent developmentsin the
sector, and initiatives that are to be taken to improve
the market are analyzed.
Organized
financing is still availed by only a quarter of the
population. In spite of growing investments in the housing
sector in recent years, the mortgage to GDP ratio is
very low at 3% in India in 2001, which is very low even
for a developing economy. |
