Financial Sector Reforms and Housing Finance

Housing Finance is a high growth sector these days and is tipped to grow at a phenomenal 27-38% per annum. Housing Finance market is estimated to be about RTs. 80000 crore during the year 2006-07. Keeping in view the global economic environment banks and financial institutions have brought sea changes in their strategies and there is shift from sellers market to buyers market. Liberal tax incentives by the government, low and competitive interest rates for housing finance have made this sector as red hot sector. Despite the general approach of the financial sector reforms process to establish regulatory convergence among institutions involved in broadly similar activities, given the large systemic implications of the commercial banks, many of the regulatory and supervisory norms were initiated first for commercial banks and were later extended to others types of finanical intermediaries. This is due to the globalisation process; India is witnessing competition among banks that has reduced the cost of finance to the users. Keeping in view the importance of housing finance in solving the housing problems this paper analyse the performance of this sector while identifying its problems and challenges. A look has also been given to the future prospects of this sector