causing an artificial scarcity of land in rural areas. another major issue is absence of large scale digitization of land records and the easy access to such records for checking titles / encumbrances. the dynamics between rural and urban housing demand is also different with housing in rural india still largely for own use rather than for sale and resale. a possible reason for this, among other things, could be the problem of transferring ownership rights. as we reach limits to urbanization in metros, rural areas should increasingly come under the focus of real estate development and we would require strong legal framework to prevent the bottlenecks. role and responsibilities of stakeholders given the dimensions of the problem and various constraints that affect a viable and sustainable solution, well - coordinated and concerted effort on the part of all the stakeholders, including the private sector, is required. this will ensure that all segments of the population genuinely aspiring to own a house are effectively catered to without of course compromising on financial stability and ecological balance. efforts of regulators and government / government bodies to tackle this colossal housing shortage will have limited impact until and unless the private sector joins hands to meet the challenge. commercial banks and hfcs the indian banking sector has an expansive reach and is well geared to serve all segments of the society, including the underprivileged. the banking sector has been actively involved in lending to the housing sector with an outstanding of rs. 3786 billion as on december 30, 2011, which is an increase of rs. 410. 10 billion ( 12. 10 per cent ) over the previous corresponding year. the housing loan portfolios of hfcs registered a growth of bis central bankers ’ speeches 21. 71 per cent during 2010 – 11. this was comparatively higher than 15 per cent growth reported by commercial banks ( tables ii & iii ). table ii comparative position of housing sector credit by commercial banks and hfcs table iii outstanding housing loans of hfcs2 the housing loan portfolio of any financial institution is a product of two variables – number of accounts and loan outstanding per borrower. it has been observed that there has been a noticeable slowdown in the growth of the portfolio ( tables iv & v ). one plausible reason is that post - crisis, banks have realised that while the demand for housing loans is tremendous, there is no substitute for prudent lending policies. this probably explains the slowdown in the growth rate of number of accounts. another reason which has affected the demand has

. the penetration level of mortgages is miniscule when compared with the shortage of housing units. this problem is more acute for low income families seeking affordable houses. need for long - term debt market housing constitutes a long term asset for a large segment of population in rural and urban areas. as debt markets are not very deep, access to long - term funding for housing finance institutions is difficult. most banks use their shortterm funds from deposits and deploy these funds in long - term housing loans, thereby creating an asset liability mismatch. reserve bank of india has cautioned banks of the dangers of borrowing short and lending long. to mitigate such problem, in some countries, banks have been permitted to float long - term mortgage bonds to match their mortgage assets. to tackle the interest rate risks, most assets and liabilities are on a floating rate basis. in india, there has been a long - standing demand to allow pension and provident funds to invest in housing finance. these funds are suppliers of long - term capital. they typically have a low risk tolerance but do crave for diversification. the mutuality of interest is strong between homeowners and long - term institutional investors. going forward, to tide over the paucity of funds, it is imperative to develop the secondary mortgage market. securitisation ensures recycling of funds. while some countries in south asia have issued mortgage - backed securities, most transactions are sporadic and ad - hoc. rigidities in the legal framework, high stamp duties and lack of uniformity in underwriting norms are recognized as some of the hindrances in the development of mortgage market. of course, regulatory concerns for unbridled securitization and massive growth in home loan portfolio with very lax underwriting standards which caused considerable damage to the financial markets, particularly in the context of the advance economies like the us, have to be kept in view. drawing upon the lessons from imprudent securitization of mortgages which contributed to a larger extent to the recent global financial crisis, reserve bank of india is reviewing the regulatory framework for securitization in india. it is expected that the market for residential mortgage backed securities ( rmbs ) will develop on safe and sound lines under the new regulatory framework. loan products a housing loan is inherently different from any other retail loan. this is because a house is probably the single largest investment a person makes in his / her lifetime. it has been noticed that a customer seeking a housing loan