Pradhan Mantri Awas Yojana: India Mortgage Guarantee Corporation (IMGC), India’s first company has launched a guarantee cover for central government’s PMAY to broaden the coverage of home loans with shorten the of risk on books of lenders. The product is an insurance cover for Pradhan Mantri Awas Yojana.
“In some part of the world, Mortgage guarantee is known as mortgage insurance. And this insurance compensates banks and housing finance companies for losses that may arise when a home owner defaults on a home loan.
The insurance product of IMGC will allow the home buyers under PMAY projects to extend the loan term up to 30 years and also allows seven years term extension beyond retirement age. In some cases, the product will also allow the the lenders to offer loans to customers till they achieve the age of 75 years.
The product will definitely help in achieving the broad target of housing for all by 2022 scheme. Through this product, the company will help to bridge the demand gap in low income groups by increasing the credit flow.
IMGC guarantees to cover the first loss up to 20% of outstanding principal balance, this entails paying of the outstanding equated monthly instalments (EMIs) when the account is a non-performing asset to the maximum coverage amount.
The company offer this product to lenders under standardised program and they have also tie-up with two banks and four housing finance companies. It has guaranteed over 10,000 retail loans across the country covering a cross section of borrowers.
Under PMAY-Urban, central government has so far approved construction of more than 16 lakh houses with the worth of Rs. 90,000 crore, with a central assistance of about Rs 25,000 crore.
The product can also help the buyers to opt the bigger home loans with affordability.
The majority of IMGC shares are in the hand of NHB with 38% stake, followed by US-based Genworth Financial with 36% and Asian Development Bank and International Finance Corporation have 13% stake each.