The Reserve Bank of India [Get Quote] Deputy Governor Rakesh Mohan urged housing finance companies on Sunday to look at designing home loan repayment structures which would suit individuals with irregular income flows and in need of affordable houses.

"To build affordable houses, we would have to look at the needs of the common man and keep matters simple. Banks and housing finance companies will have to reduce their transaction costs with the use of technology,'' said Mohan at a seminar on finance for affordable housing.

Mohan also stressed the need to standardise procedures and simplify documentation for home loan seekers and have mortgage counsellors for consumers, added Mohan.

The National Housing Bank is looking at certifying real estate agents and building a database of property dealers. The deputy governor also added that, in the absence of data, it would not be proper to conclude that lending to the lower income group contains the risk of high default. The housing finance companies and bankers, in a meeting with government representatives, had raised the issue of rising non-performing assets vis-a-vis the loans extended to lower income groups.

P P Mitra, economic adviser, ministry of finance, said, "Bankers expressed the view that the availability of funds for financing houses is not a problem. However, directing the flow of funds to economically weaker sections and low income housing projects, is an issue. We would have to device innovative solutions to address the demand for homes upto Rs 500,000. Bankers are also worried about the rising non-performing assets in these portfolios. Hence, the government is debating if budgetary support can be leveraged for these products.''

"The leakage of government subsidy is also an old menace. It is being contemplated that the housing grant extended to such individuals (lower income group) could be directly routed to the housing finance company. Hence, the instances of misuse could be eliminated,'' added Mitra.

National Housing Bank has estimated additional housing requirements of 45 million units in rural and urban areas between 2007 and 2012.