affordable housing – way ahead? micro housing finance corporation housing finance: the emerging...
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Affordable Housing – Way Ahead?
MICRO HOUSING FINANCE CORPORATIONHousing Finance: The Emerging ContoursCAFRAL & NHB Round Table
October 7, 2011 | New Delhi Pictured: Anandgram Project, Yevat, Pune
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CONTENTSOur CustomerOur ProductOur Projects
Our TechnologyCurrent Status
ChallengesPartnershipsContact Us
Pictured: Worli Village Slums, Worli, Mumbai
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A Typical MHFC Customer:
• Average MHI: Rs. 8,000 to 20,000
• Primarily employed in the informal sector
• Average HH Size: 5
• Households with multiple earning members
• Currently living in rental housing or illegal tenements
• Aspiration to own their own homes
OUR CUSTOMER
Pictured: MHFC customer Badri Thakur at Fanaswadi, Mumbai
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Salient Product Features:
• Loan Size: Up to Rs. 10,00,000
• Loan to Value Ratio: 80%
• Loan Term: up to 15 years
• Interest Rate: 12% to 14% (reducing)
• Security: mortgage of the house being financed
• Covenants: bank account / ECS
OUR PRODUCT
Pictured: MHFC Customer, Ibrahim Shaikh in Colaba, Mumbai
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MHFC currently has an active presence in over 45 projects across
Urban India:
Mumbai
Pune
Nagpur
Surat
Ahmedabad
Indore
Kolkata
OUR LOCATIONS
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OUR TECHNOLOGY
Pictured: MHFC customer Kailash Naikwade in Sadashiv Peth, Pune
High Investment in Technology:
• Enhance credit quality Use intelligent business software Create customer information
banks Analyze in-house / acquired
customer data (telecoms) to extrapolate and make credit decisions
• Reduce operating costs Set up efficient disbursal systems RTGS, ECS payments, mobile
telephony platforms
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Pictured: MHFC customer Chandrakant Kharvi in Bhayendar, Mumbai
CURRENT STATUS• NHB COR received in February 2009
• Capital : Rs. 36.5 crores
• Commenced operations in June 2009
• Total Applications Received: 1332
• Total Loans Sanctioned: 1118
• Total Amount Sanctioned: Rs. 45.39 crores
• Average Loan Size: Rs. 4 lakhs
• Number of Approved Projects: 45
NB: All numbers updated as of October 5, 2011
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• Customer Challenges
• Builder Challenges
• Policy Challenges
• Regulatory Challenges
CHALLENGES
Pictured: MHFC customer Bharat Sharma in Meghdoot Nagar, Indore
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CHALLENGESAwareness & Self Exclusion
• Lack of awareness on affordable housing options and formal housing finance
• Ineligibility self exclusion from seeking housing options
• Solution: Increase awareness via on-ground marketing & partnerships
Decision Making• Longer decision making time crowding out• Solution: Allow booking / reservation of pre-
approved flats on behalf of customer
Collection Mechanisms• Banks are expensive collection mechanism
options• Solution: Mobile repayments via mobile
wallets / platforms
Pictured: MHFC customer Rahul Singh in Boisar, Thane
Customer
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CHALLENGESLower Construction Costs
• Functional construction design• Cost-effective construction materials• Improved use of technology• Speed of construction
Approach to LIG Housing Construction
• Project and Assembly-line approach to construction
• Land as working capital vs land as appreciating asset
• Access to project finance to create ready-for-sale units
• Reducing approval times
Pictured: Vaishnavi Sai Complex in Virar (E), Mumbai
Builder
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CHALLENGES• Automatic SARFAESI clearance for all
housing finance companies• Long term credit guarantee• Increase market capital available in
affordable housing finance sector through commercially viable solutions like:a) Refinance– Better terms for smaller ticket size
loans, including more liberal coverage ratio
– “Urban + Small Ticket, similar to rural refinance
– Cheaper and more easily availableb) Priority Sector Definition– Current definition: < Rs. 20 lakhs– Proposal: additional benefits for
< Rs. 5 lakhs
Pictured: MHFC customer Jalinder Mhoprekar in Crawford Market, Mumbai
Regulatory
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CHALLENGES• Past vs. Future Financing
Loans sanctioned based on past disbursals instead of futureSolution: disbursal milestones
• Financing TermsCurrent: based on creditworthiness of owners vs. businessSolution: based on business model & cash flows
• Develop Long Term Debt MarketsCurrent: only short term financing (5 yrs) available vs. customer repayments over 15 yrs asset liability mismatchSolution: direct access to ECBs or through the NHB
Pictured: MHFC customer Chandrakant Kharvi in Bhayendar, Mumbai
Financial
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PARTNERSHIPS• Banks
- Identify customers- Service customers- Customer referrals (two-way)
• NGOs & MFIs- Share customer information- On-ground marketing / awareness
• CorporatesSpreading the word among employees that fall within our customer segment (contracutal and non-contractual)
• TelecomsCustomer databases
Pictured: MHFC customer Shankar Khatawat with his family in Yavat, Pune
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Micro Housing Finance Corporation# 3 Victoria Building, 1st FloorSA Brelvi Marg, Off Horniman CircleFort, Mumbai 400001
Tel: (022) 2266 0130 or 0427Email: [email protected]: www.mhfcindia.com
CONTACT US
Pictured: MHFC customer Laxman Thorat in Crawford Market, Mumbai