A Critical and Comparative Analysis of Scheduled Commercial Banks and Housing Finance Companies (A study regarding Housing Finance)

Housing is a primary necessity in every economy and is a basic indicator of growth and social well-being. Living in satisfactory housing conditions is one of the most important aspects of people's lives. Development of housing is not just important to economic growth but is also one of the most important tools for economic development considering the forward and backward linkages it has; even a small initiative in housing will propel multiplier effect in the economy through the generation of employment and demand. In India, the demand for housing has increased rapidly due to population growth and other reasons. The need for finance to purchase a house brought out specialized housing finance institutions. At present, the need for housing finance in India is largely being fulfilled by 58 Housing Finance Companies registered with NHB and 146 Scheduled Commercial Banks and other various institutions. Amongst them, SCBs and HFCs are the largest mobilizers of households’ savings. During the last decade, they have assumed a dominant role in the provision of mortgage finance in the country. Keeping their vital role in the field of housing finance, this paper has attempted to analyze critically the operational performance of SCBs and HFCs as well as their comparison. For this, the authors have used graphical method, growth rate method and average method on the basis of secondary data. Over the last five years in scope of this research paper, it has been observed in the SCBs’ portfolio mix that decline in housing loan has resulted in increased loans to agriculture and industry whereas HFCs continue to strengthen and increase their housing portfolio base.