Of the 20 lakh new houses that the government plans to build, 7 lakh would be in urban areas and the corporation has already earmarked Rs 933 crore for this, Hudco chairman and managing director V Suresh told PTI in an interview. This would be in addition to Hudco's assistance to part finance the 13 lakh additional units per year in rural areas and the corporations participation in urban housing would be over and above its routine operations, Suresh said.

The national agenda of the BJP-led coalition has set a target of constructing 20 lakh additional houses every year to meet the estimated shortage of dwelling units which is to the tune of 310 lakh.

Hudco will also contribute a part of its profits and interest as credit to the national shelter fund, to be set up the government for covering the risk associated with financing rural housing projects, he said.

"Hudco will extend two per cent of its profits for the risk fund and also be willing to earmark two per cent of the interest accruals of the 85 million deutsche mark line of credit from KFW of Germany," Suresh said.

The corporation is also willing to surrender the risk charge it collects on projects financed by it to the national shelter fund, he said, adding "in fact our proposal has been to operate the fund from Hudco itself." Suresh said 55 per cent of the corporation's resources of its housing portfolio is earmarked for economically weaker sections and low income groups.

Hudco extends loans to the lower income brackets at concessional rates of interest, which are as low as nine per cent for economically weaker sections (EWS) housing loans as against 16 per cent for higher income groups (HIG), he said.