Introduction

1. Housing is normally considered as a consumption activity. However, house is a catalyst or a primary agent for a change in socio-cultural pattern and other characteristics of human life, including economic development, since it forms a nucleus for the operations of many human activities and is an essential contributory factor for improvement in life. Hence, housing can be used for productive purposes by combining housing with income generation. Thus, housing and productive activity combines to form a virtuoso cycle, feeding each other, for the benefit of the family.

Concept of PHIRA

2. The SOHO – "Small Office, Home Office' concept has worked well in urban areas, leading to increase in per capita income and saving and improvement in life style. The data released by the Census of India on House, Households, Amenities and Assets for 2001, indicate that total number of households in rural areas is 138.27 million as against the availability of 135.05 million houses (used as residences and residences-cum-other purposes).
3. Majority of these houses used for residences-cum-other purposes are often without any demarcation, leading to sacrificing the habitat conditions. If places for residence and economic activity are demarcated, there will  be improvement not only in habitat conditions but also in working environment. This will help in improving the productivity leading to increased income, saving, etc. thereby helping improvement of the life style of rural people, which will have a long  term significant impact on health, education and standard of rural living.
4. Home workers, particularly in rural areas, constitute a significant potential workforce, which if harnessed can generate additional economic growth in the rural areas. Also, majority of these home workers are women. It is estimated that home workers constitute 51% of the women workforce in the country.

NHB: PHIRA

5. National Housing Bank, an all India financial institution, set up under the Act of parliament and a wholly owned subsidiary of Reverse Bank of India, has launched a new programme called Productive Housing in Rural Areas (PHIRA) under which a composite loan of housing and income generation is extended.

Objective

6. The objective of this scheme for rural housing is to facilitate construction of houses for rural families and also to provide a source of sustainable income to the rural poor which would develop their repayment capacity.

Target Market

7. Persons marginally above the poverty line in rural areas

Purpose of Loan

8. Purpose of loan is to provide financial assistance for construction of a decent house and thereafter starting or augmenting income generating activity in one of the following categories so as to enable the borrower to repay the loan.

• Small business/ Trade,
• Tiny/ cottage industry or service activity,
• Artisan activities,
• Agricultural and allied activities
• Any other productive activity

9. Quantum of loan

• Under the Scheme, a composite loan of Rs.70,000 will be extended, of which an amount to the extent of 25% of the loan i.e. Rs. 17,500 if for the income generating activity and an amount of Rs.52,500 is for construction of housing unit plus work area, including purchase of land. The limits are indicative and may be modified by NHB.
• An incremental loan of Rs.25,000 could also be considered to be extended after a period of 3 years from the date of disbursement of earlier loan for upgradation of house built.
• Besides, a life insurance policy will also be taken for the borrower's life either individually or through a group insurance plan to ensure recovery of the outstanding loan in case of the death of the borrower.

10. Tenure of Loan

The loan will need to be replied within a maximum period of 15 years from the date of disbursement of loan, with an initial  moratorium of one year for income generated from the business activity in which he/she in engaged.

11. Implementing Agency

NHB would provide housing loan component through banks/HFCs/Microfinance Institutions having reach in rural areas by way of 100% refinance. The banks/HFCs/ Microfinance institutions will further finance the target group either directly or through SHGs. NHB can also consider direct finance to SHGs/Societies/Federations with appreciate legal constitution.

12. Economic Benefits

PHIRA has potential for scalability, NHB's estimates of PHIRA benefits, if implemented on a national scale by the banking system are a follows:

• Loan disbursement per annum                                     Rs.6,700 crores
• Loan disbursement in XI Plan Period (2007-2012)        Rs.33,600 crores
• Number of families covered                                           5 million
• Additional family income generated                               Rs.5,000 crores
• Additional income generated on account of
  Multiplier effect of housing construction                         Rs.160,000 crores
• Additional jobs created                                                  1.1 million jobs p.a.
  (includes the jobs created for housing construction)