With the establishment of the National Housing Bank and the emergence of many private and joint sector housing finance companies the housing finance system has grown during the last decade and become market oriented.

This paper, examining the extent of financial deepening and role of institutional housing finance in urban India and the distribution of funds across various income groups demonstrates that the middle and upper income families are the main beneficiaries of such housing finance efforts. The authors suggest a range of policies and programmes that can both increase investments in housing as well as serve the needs of the urban poor.

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It is ironic that one of the better ideas for a totally new direction in housing policy has been targeted at the middle and upper income groups. If the National Housing Bank is to be oriented towards the poor, then it would have to include programmes for them related to home upgradation and infrastructure development.