The Government is working on appraisal process for housing loans to informal sector

By Pradeep Yuvaraj | August 16, 2011

A recent press report said that the government is working with the World Bank and the International Finance Corporation (IFC) to develop an appraisal mechanism for borrowers in the informal sector for disbursements under the mortgage risk guarantee fund for housing loans.

A World Bank spokesperson said that they have just started to work on the project and that it is preliminary to share any details on this.

Reports said that the fund will have a corpus of Rs.1, 000 crore contributed by both the central government and NHB. The disbursals under the fund will start after the processing of the appraisal system. The fund is expected to offer loans up to Rs. 5 lakh.

Mr. Verma, CDM, NHB said that it would be a good business opportunity for the lenders if they understand the market and measure the risk. He also said that extra cost is involved in appraising the home loan segment.

He said that lenders will have to review the earlier history of the borrower, his job patterns and the income flow if they do not have salary slips. He added saying that NHB expects to connect the lenders and the informal sector borrowers and make use of international models to ensure credit flow to this segment.

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About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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