Indian community-based housing finance systems: Potentials and pitfalls for urban development and housing improvement

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Abstract

In developing and emerging countries, housing finance is mainly mortgage finance in combination with Western unsecured credit, both of which do not serve the bottom of the income pyramid. Poorer sections of society depend on incremental finance for building their houses. A combination of different sources is usually used including individual servicing of housing finance and community-based housing finance. Community-based financing covers a relatively small section of the housing finance market. In the formal financial sector, such initiatives include mainly credit unions and cooperatives. In the informal sector, a much broader kaleidoscope of community-based financing schemes and links with banks exists. This paper provides an overview of three kinds of informal community-based housing finance associations: rotating savings and credit associations, savings associations and accumulating savings and credit associations. These examples can be seen as a source of good practices. However, schemes that are commodified can have a huge potential for the development of informal settlements, but can also become instruments of institutions, benefiting the state and the better off, who profit at the expense of those at the bottom of the income pyramid.
Original languageEnglish
JournalInternational Journal of Urban Sciences
DOIs
Publication statusE-pub ahead of print - 31 Aug 2018

Fingerprint

housing finance
urban housing
financial system
urban development
finance
housing
credit
community
savings
rotating savings and credit association
income
informal settlement
informal sector
housing improvement
best practice
market
bank
profit

Keywords

  • housing finance
  • community-based
  • informal
  • formal

Cite this

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title = "Indian community-based housing finance systems: Potentials and pitfalls for urban development and housing improvement",
abstract = "In developing and emerging countries, housing finance is mainly mortgage finance in combination with Western unsecured credit, both of which do not serve the bottom of the income pyramid. Poorer sections of society depend on incremental finance for building their houses. A combination of different sources is usually used including individual servicing of housing finance and community-based housing finance. Community-based financing covers a relatively small section of the housing finance market. In the formal financial sector, such initiatives include mainly credit unions and cooperatives. In the informal sector, a much broader kaleidoscope of community-based financing schemes and links with banks exists. This paper provides an overview of three kinds of informal community-based housing finance associations: rotating savings and credit associations, savings associations and accumulating savings and credit associations. These examples can be seen as a source of good practices. However, schemes that are commodified can have a huge potential for the development of informal settlements, but can also become instruments of institutions, benefiting the state and the better off, who profit at the expense of those at the bottom of the income pyramid.",
keywords = "housing finance, community-based, informal, formal",
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journal = "International Journal of Urban Sciences",
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N2 - In developing and emerging countries, housing finance is mainly mortgage finance in combination with Western unsecured credit, both of which do not serve the bottom of the income pyramid. Poorer sections of society depend on incremental finance for building their houses. A combination of different sources is usually used including individual servicing of housing finance and community-based housing finance. Community-based financing covers a relatively small section of the housing finance market. In the formal financial sector, such initiatives include mainly credit unions and cooperatives. In the informal sector, a much broader kaleidoscope of community-based financing schemes and links with banks exists. This paper provides an overview of three kinds of informal community-based housing finance associations: rotating savings and credit associations, savings associations and accumulating savings and credit associations. These examples can be seen as a source of good practices. However, schemes that are commodified can have a huge potential for the development of informal settlements, but can also become instruments of institutions, benefiting the state and the better off, who profit at the expense of those at the bottom of the income pyramid.

AB - In developing and emerging countries, housing finance is mainly mortgage finance in combination with Western unsecured credit, both of which do not serve the bottom of the income pyramid. Poorer sections of society depend on incremental finance for building their houses. A combination of different sources is usually used including individual servicing of housing finance and community-based housing finance. Community-based financing covers a relatively small section of the housing finance market. In the formal financial sector, such initiatives include mainly credit unions and cooperatives. In the informal sector, a much broader kaleidoscope of community-based financing schemes and links with banks exists. This paper provides an overview of three kinds of informal community-based housing finance associations: rotating savings and credit associations, savings associations and accumulating savings and credit associations. These examples can be seen as a source of good practices. However, schemes that are commodified can have a huge potential for the development of informal settlements, but can also become instruments of institutions, benefiting the state and the better off, who profit at the expense of those at the bottom of the income pyramid.

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