The Urban Poor in India is constituted to 25% of the population, in terms of numbers, they constitute 81 million people, i.e: 8.10 crores population is urban poor. Most of the people migrate to the urban region in search of opportunities as well as to earn a livelihood. Due to un-affordability, many poor people are forced to live in slum-dwelling units or illegal encroachments wherein they also lack basic facilities like water supply, sanitation, etc. The urban Poor also face the problem of the demolition of establishments or sometimes extortion done by the government officials. There are no low-cost houses been available for the urban poor as in most of the Metropolitan cities the prices for apartment costs in a sum of huge lacks or mostly in crores. The slum rehabilitation project government is implementing in order to make India slum-free. There are over 1.8 million i.e.: 18 lakhs homeless individuals in India.
Challenges faced by Urban Poor in securing loans:
- Most of the urban poor are employed in an un-organized sector with low wages, exploitation, and least job security.
- The urban poor do not have a fixed source of income, and some are employed as daily wage workers with no security of job or no guarantee of income.
- The urban poor may sometimes receive their salary in cash and hence may not have proper income proof.
- Also, the urban poor may buy houses in illegal encroachments or properties with unclear property titles and hence may not be able to obtain loans.
Challenges faced by rural poor in securing loans:
- In extremely remote places or isolated locations of the country, there is a very low network of banks or financial institutions, and hence people may find it difficult to obtain loans if placed at an extremely isolated location.
- In the rural region, the primary occupation of the villagers is farming. In the farming activity, there is always an uncertainty of the crops getting weathered away. Some of the banks may reject their clearance in case of the applicant not being able to provide any mortgage of assets so as to obtain loans from the rural branches.
- Many villagers do not have any income proofs, and due to most of the un-accounted income, the applicant’s loans may be rejected.
Government schemes of Home Loan for Poor:
The Government of India has launched the PMAY “Pradhan Mantri Awas Yojana” for the purpose of housing for all under Ministry of housing. This scheme has special benefits for the LIG [Low Income group] as well as the EWS [Economically weaker section] of the society. By this scheme, they can avail home loan at a reasonable rate of interest
Credit linked subsidy:
The LIG & EWS is categorized into applicants having an income of fewer than three lakhs are considered as an economically weaker section, while the individuals having an income of 3-6 lacks considered as lower-income groups. The maximum subsidy of Rs.2.67 lacks can be availed.
Conditions for availing benefits:
- If the property is purchased in an individual’s name there should be one female applicant in joint name. However, this rule does not apply if the extension of the house is done or converted from temporary shelter to permanent shelter.
- The maximum area should be 30 sq.mt for EWS, while for LIG it should be 60 sq.mt.
- The maximum duration on which the scheme will be calculated would be for a duration of 15 years.
Mhada housing schemes for lower income group:
The Maharashtra housing and area development authority constructs low-cost housing schemes for the poor under the housing for all scheme. The houses are available in the range of 15-20 lacks for EWS while for LIG it is 20-25 lakhs
Pradhan mantra home loan scheme:
The scheme is meant for LIG & EWS category people who can avail of the scheme. Interest subsidy of 3%-4% for loans up to 12 lakhs or 9 lakhs.
Categories of beneficiaries under the scheme:
- Subsidy of 6.5% per annum.
- In terms of rupee a person can save uptho Rs.2.20 lakhs
Thus, the government institutions are striving hard to help the poor have their own shelters by providing subsidies on loans provided to the poor. In the year 2015 government of India had set the target of housing for all in order to help people buy their own houses. The government is targeting that every homeless should have their own homes in urban areas as well as in rural as well people should have their permanent houses with proper sanitation facilities as well as proper electricity supply, water supply. Various co-operative credit societies also provide loans to the poor with minimal documentation to help the poor buy/construct their own houses.