Lending institutions ready to provide institutional credit to PMAY-G beneficiaries

An important dialogue was held in Lonavala with the aim of ensuring that beneficiaries under the Pradhan Mantri Awas Yojana-Gramin (PMAY-G) receive affordable and institutional credit. In the 'PMAY-G Reform Samvad' organised by the Ministry of Rural Development (MoRD) and National Housing Bank (NHB), various lending institutions expressed their readiness to design dedicated loan products for rural housing and to work with the Ministry and States for reforms.

According to a PIB report, this one-day dialogue saw participation from various stakeholders, including State Governments, Housing Finance Companies (HFCs), Small Finance Banks (SFBs), Micro Finance Institutions (MFIs), and Regional Rural Banks (RRBs). Additionally, the World Bank, International Finance Corporation, Sa-Dhan, and TCIS Habitat for Humanity International were also involved in the discussion.

During the discussion, lending institutions stated that families under PMAY-G represent a promising and largely untapped segment. Beneficiary verification is conducted under the scheme, a major portion of expenditure is covered by government assistance, and construction tracking is done through milestones on the PMAY-G platform, which reduces the cost and risk of lending.

Delivering the keynote address, Senior Economic Adviser (Rural Housing) to the Ministry, Piyush Srivastava, stated that PMAY-G is the world's largest housing scheme and its achievements in the rural housing sector are satisfactory. Emphasising the need for more coordinated efforts towards the national goal of housing for all, he said that institutional financial assistance can act as a 'force multiplier'.

PMAY-G aims to complete 4.95 crore pucca houses by March 2029. The cost of constructing rural houses often exceeds the assistance received under the scheme, leading to delays in construction and forcing families to turn to informal lenders with high interest rates. On the other hand, institutions reaching the last mile face challenges such as fund shortages, credit risk, and a lack of standardised rural housing loan products.

During the dialogue, HFCs, SFBs, and MFIs showed deep interest in providing credit beyond the scheme's assistance. However, issues such as unclear land titles, restrictions on the mortgage of allotted properties, seasonal income, high transaction costs, and credit risk were highlighted as major obstacles. Various recommendations were also made to overcome these hurdles.

The progress of PMAY-G in Maharashtra, Rajasthan, Madhya Pradesh, Assam, and Kerala was also reviewed during the workshop. On this occasion, Director of Rural Housing, Government of Maharashtra, Dr. Rajaram Digge, welcomed the attendees, and Managing Director of NHB, Sanjay Shukla, emphasised the need for affordable institutional credit to help rural families complete their homes.

The Ministry will examine the suggestions received from this dialogue and proceed by consulting with NHB, State Governments, lending institutions, and knowledge partners.