A report of the National Sample Survey Office (NSSO) has revealed that access to institutional credit to the common man, both in rural and urban areas, for constructing a house is a distant dream with only about 10 per cent getting access to it, both in rural and urban areas. On the other hand, the non-institutional lending agencies (read money lenders) seem to be doing much better in providing finance. This, when it is common knowledge that rapid and haphazard urbanisation is a fact in the country and it is the stated objective of a large number of government agencies to ease the availability of institutional finance for housing.
The survey, 65th round of the survey carried out between a period from July 2008-June 2009 that was released recently, said that only nine per cent of the completed constructions in the rural areas had some amount of access to finance from the institutional agencies.
In the urban areas, this figure was not more than 11 per cent.
The financing from the non-institutional agencies was nearly 27 per cent in the rural areas and the corresponding numbers for the urban areas was 26 per cent. In other words, it also meant that more than 66 per cent of households taking up construction activities in rural areas utilised their own resources, while the same figure for the urban areas was 61 per cent.
Out of the 13 identified sources of finance, the report revealed that, in rural areas, the money lenders were prime source of financing of construction in at least 116 households per 1,000 taken up for survey. In stark contrast, the institutional sources — government, commercial banks (including regional rural banks), cooperative societies insurance, provident fund, financial corporation or other any other institutional agency — made up for only 93 households per 1,000 taken up for survey. Friends and relatives, however, were the biggest source in rural areas.
In urban areas, the situation was only marginally better with the money lenders accounting for financing of 111 household (out of every 1,000) against 114 households per 1,000 being financed by institutional agencies. Friends and relatives again remained the major source for finance in urban areas too.