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Housing and Real Estate:Govt Housing:

Affordable Housing for 5 Cr Employees through EPFO on low interest rate with incentives

By: Amit, Place: New Delhi,  Update:05 Jan 2015

Affordable housing in India is not a dream, but it is going to be implemented in very few months. Govt is going to utilise Employees Provident Fund for affordable housing for EPFO members. The govt will provide houses on low interest with various incentives to make it more affordable.


The Labour Ministry is preparing a mega housing scheme to offer affordable houses to over 5 crore members of retirement fund body EPFO in the backdrop of the government's mission 'Housing for all by 2022'.


The Ministry intends to collaborate with PSU banks, housing finance companies, state-owned construction firms like NBCC and authorities like DDA, PUDA, HUDA to build houses at a price to be fixed by the government.


 "Labour Ministry is preparing a scheme under which affordable houses will be provided to the Employees' Provident Fund Organisation (EPFO) members, particularly those who are in the low income bracket," a source in the ministry said.


At present, there are over 70 per cent EPFO members whose basic wages are less than Rs 15,000 per month.

 In a recent note, the Prime Minister's Office had asked EPFO to promote affordable housing for its members and use its funds for the purpose.


 According to the note, deployment of 15 per cent of EPFO funds as loan for low cost housing would generate a credit flow of Rs 70,000 crore and can create 3.5 lakh additional low-cost homes.


 EPFO currently manages a huge corpus of Rs 6.5 lakh crore and its annual incremental deposit is in excess of Rs 70,000 crore.


The Labour Ministry is keen on a scheme under which EPFO members could withdraw their PF deposits to make part-payment of the total cost of the house.


 At present, EPFO members can withdraw money from their PF accounts for buying houses only after contributing for a period of five years in the schemes run by the body.


The Ministry also intends to provide subsidy to the EPFO members in low-income bracket to help them avail benefits of various low-cost housing schemes of the government.


Financial institutions, sources said, would be roped in to provide housing loan at low interest rates under the priority sector lending for construction of affordable houses under the scheme.


 The scheme, however, will be optional for EPFO members as there is no need to provide affordable houses to those who already own one.


 Under the housing scheme, there would three different income categories--Low Income, Middle Income and High Income.


Houses and financial incentives under the scheme will be offered on the basis of the income of a subscriber.


The members would be facilitated to pay equated monthly installments of their home loan through their provident fund account.

The source said that under the scheme EPFO may use its funds to create a corpus for provide housing loan at affordable interest rate to its members.


As per a Home Loan advisor, this move will bring housing prices down in the country at least 10 5 in near future.


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