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Download Affordable Housing – Way Ahead? MICRO HOUSING FINANCE CORPORATION Housing Finance: The Emerging Contours CAFRAL & NHB Round Table October 7, 2011 | New

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    Housing Finance: The Emerging ContoursCAFRAL & NHB Round Table

    October 7, 2011 | New DelhiPictured: Anandgram Project, Yevat, Pune

  • CONTENTSOur CustomerOur ProductOur ProjectsOur TechnologyCurrent StatusChallengesPartnershipsContact UsPictured: Worli Village Slums, Worli, Mumbai

  • 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 homesOUR CUSTOMERPictured: MHFC customer Badri Thakur at Fanaswadi, Mumbai

  • 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 PRODUCTPictured: MHFC Customer, Ibrahim Shaikh in Colaba, Mumbai

  • MHFC currently has an active presence in over 45 projects across Urban India:



  • OUR TECHNOLOGYPictured: MHFC customer Kailash Naikwade in Sadashiv Peth, PuneHigh Investment in Technology:

    Enhance credit qualityUse intelligent business softwareCreate customer information banksAnalyze in-house / acquired customer data (telecoms) to extrapolate and make credit decisions

    Reduce operating costs Set up efficient disbursal systemsRTGS, ECS payments, mobile telephony platforms

  • Pictured: MHFC customer Chandrakant Kharvi in Bhayendar, MumbaiCURRENT STATUSNHB 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

  • Customer ChallengesBuilder ChallengesPolicy ChallengesRegulatory ChallengesCHALLENGESPictured: MHFC customer Bharat Sharma in Meghdoot Nagar, Indore

  • CHALLENGESAwareness & Self ExclusionLack of awareness on affordable housing options and formal housing financeIneligibility self exclusion from seeking housing optionsSolution: Increase awareness via on-ground marketing & partnerships

    Decision MakingLonger decision making time crowding outSolution: Allow booking / reservation of pre-approved flats on behalf of customer

    Collection MechanismsBanks are expensive collection mechanism optionsSolution: Mobile repayments via mobile wallets / platformsPictured: MHFC customer Rahul Singh in Boisar, ThaneCustomer

  • CHALLENGESLower Construction CostsFunctional construction designCost-effective construction materialsImproved use of technologySpeed of construction

    Approach to LIG Housing ConstructionProject and Assembly-line approach to constructionLand as working capital vs land as appreciating asset Access to project finance to create ready-for-sale unitsReducing approval times

    Pictured: Vaishnavi Sai Complex in Virar (E), MumbaiBuilder

  • CHALLENGESAutomatic SARFAESI clearance for all housing finance companiesLong term credit guaranteeIncrease market capital available in affordable housing finance sector through commercially viable solutions like:a) RefinanceBetter terms for smaller ticket size loans, including more liberal coverage ratioUrban + Small Ticket, similar to rural refinance Cheaper and more easily availableb) Priority Sector DefinitionCurrent definition: < Rs. 20 lakhsProposal: additional benefits for < Rs. 5 lakhsPictured: MHFC customer Jalinder Mhoprekar in Crawford Market, MumbaiRegulatory

  • CHALLENGESPast vs. Future FinancingLoans 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, MumbaiFinancial

  • PARTNERSHIPSBanks- 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 databasesPictured: MHFC customer Shankar Khatawat with his family in Yavat, Pune

  • Micro Housing Finance Corporation# 3 Victoria Building, 1st FloorSA Brelvi Marg, Off Horniman CircleFort, Mumbai 400001

    Tel: (022) 2266 0130 or 0427Email: contact@mhfcindia.comWebsite: www.mhfcindia.comCONTACT USPictured: MHFC customer Laxman Thorat in Crawford Market, Mumbai



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