know your customer (kyc) guidelines & anti-money - ifc
TRANSCRIPT
Our Approach to Finance Home Loans to Low
Income Segment
Tokyo - Oct, 2012
Aadhar Housing
Finance Pvt. Ltd.
(A DHFL Group Company)
About Us
Aadhar is supported by DHFL, DHFL Vysya and
International Finance Corporation (IFC)
DHFL has 27 years of strong expertise in providing housing
loans to low and middle income segments at fair terms.
Aadhar is registered as a Housing Finance Company and
Regulated by the National Housing Bank
2
● DHFL is the third largest housing finance company, and second largest private sector in India with a loan book size of $3.62 bn.
● Network of more than 437 locations across
India , almost 80% of the network is in Tier 2 and Tier 3 cities
Price per Dwelling
Unit
Est Market
size
Between $ 5k -18k $ 200 bn
Between $ 18k -54k $ 163.64 bn
Above $ 54k $ 90.91 billion
First Blue Home
Finance
DHFL Group
Above
$ 54k
$ 18k - 54k
$ 5k – 18k
Below $ 5k
Industry
• Estimated housing shortage of 24.7 million units in urban and
rural India.
• Of the total shortage, 98% constitutes demand from low-
income households.
• Total housing loan market in India is estimated at $110 bn.
• Low Mortgage to GDP ratio for India provides huge opportunity
for growth on sustainable basis for years to come
• Low-cost housing units of 200–350 sq ft. priced between
$3,000- 6,000 would be affordable without subsidies to 23–28
million Indian households. Those households already pay
rents comparable to the mortgage EMIs they would pay.
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Aadhar – Overview & Geographical Presence
• 7 States
• 4 Regions
• 17 Branches
• 59 locations
• These 7 states as per Census
2011, account for 46% of the total
Indian population.
• Increase in the per capita income
of these states, did not witness
any beneficial significance among
the lower income strata.
• Access to organized credit is still
a big challenge
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Aadhar Focus M
on
thly
Ho
us
eh
old
In
co
me
Source: NHB trends in Housing | CRISIL Infra Report | Monitors Research
USD = $55
0.10%
3%
2%
4%
8%
29%
54%
> $2500
$1100 - $2500
$750 - $1100
$500 - $750
$300 - $500
$135 - $300
$135
Income Pyramid
• Aadhar’s customers are individuals earning $
90- $450 a month
• Customers are employed in salaried jobs,
(Grade IV/III private sector and government),
agriculture or are self-employed
• Customers include Shopkeepers (Mom and Pop,
Garments, Cloth, Books & Stationery, and
Electronics & Mobile) and Grain Traders
• Loan offering up to $ 22,000 but does not
exceed 80% of the cost of property
• Aadhar actively funding projects for EWS/LIG
that are being developed by Sate Housing
Boards and Development Authorities.
Extend opportunities of Home Ownership to the
underserved section of the Indian population
What did we do differently to reach
lower-income customers?
Sales Credit
Disbursement
Collection
and Operations
Sales – Overcoming challenges
Challenges
● Under penetrated markets
● Attracting talent
● Distribution
● Limited supply of housing in this segment
Overcoming Challenges
● Hub and Spoke model adopted for maximum reach
● Outsourced sales through a mix of variable and fixed payouts .
● Set up channels comprising sales agents
● Focused on resale transactions through brokers. About 50 % of
business come from brokers.
Credit – Overcoming challenges
Challenges
● Insufficient KYC
● Informal Segment
● Cash flow assessment
● Poor financial awareness
Overcoming Challenges
● Policy providing other options in accordance with regulators
● Credit policy and process tailor made for Informal Segment
● KYC / Loan availability awareness through events
Disbursement – Overcoming challenges
Challenges
● Legal - Chain documents insufficient / unavailable
● Property valuation – actual and documented valuation
● Technical
● Subdivision of plots , Identification of property address
● Plot not demarcated with boundary wall
● Vertical deviations
Overcoming Challenges
● Adapted region specific policy guidelines for legal and technical
guidelines
● Market value funding
Collection & Operations – Overcoming
Challenges
Challenges
● Banking / Repayment awareness
● Prompt collection
● Cost of collection
Overcoming Challenges
● Welcome Kit issued to customers which is a handy
information on their loan
● Reminders through SMS for EMI repayments
● Maximized collection through electronic modes –
ECS
● Local collections set up
● Facility for cash repayment at branches
Outcome
• Strong customer base of 2425 and growing.
• 79% of customers earn below $ 550/month
• 30% of customers are self-employed.
• 23% of loans are disbursed in rural areas.
• 40% of total customers pay through ECS
• 93% of customers are ECS enabled.
• Average ticket size of $ 9800.
• 29% of customers prefer self construction.
• 84% of customers prefer individual units as against
flats.
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achieved through….
Operations in 7 states of India with 15 branches and servicing 45 locations.
Managing healthy profile mix
Salaried 69%
Self employed 31%
Through Product Mix –
Purchase of flat/dwelling unit 50%
Self construction 30%
Plot 3%
Mortgage (Loan Against Property ) 13 %
Home Extension/ Improvement 4 %
Repayment of 1010 loans through Electronic Clearance. Balance all cases
through Post Dated Cheques
BEFORE Some of our customers
• Sohan Pal Singh, employed at
Ayurvedic College in Kasampur,
Meerut.
• Income: Net salary of $190
• AHFL disbursed loan of $3,739
• Mr. Purushottam Chandrakar,
runs fabrication workshop in
Raipur with his brother
• Income: Joint income is net
$500
• AHFL disbursed of $ 21672
Challenges for Expansion
• Low developer/DA/ activity impacts housing availability in many of
the Tier 3, 4 markets.
• Availability of proper legal chain documents is a constant challenge,
and technical deviations in the property is common in these
locations, as the borrowers(purchasers) are unaware of the legal and
technical norms.
• The field investigation, legal and technical evaluation charges are
much higher in smaller locations as economies of scale are low and
vendors are hard to find.
• High cost of borrowings further impacts the cost of operations.
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Some of our Customers
Customer-
Applicant – Mr. Sohan Pal Singh a Bareilly resident is employed as a Peon with
Ayurvedic College in Kasampur , Meerut.
Income : Net salary of $ 190. His elder brother is a General Physician &
younger brother has a cable TV repair business.
Current Property-
The customer wanted to demolish his existing house & build a G+1 unit.
Customer has maintains average balance in his savings account & also has
timely salary credits.
AHFL has disbursed a loan of $ 3739 to Mr. Sohan Pal Singh to reconstruct his
dream home.
Some of our Customers
Customer-
Applicant - Mr.Purushottam Chandrakar along with his brother runs a
fabrication workshop in Raipur for last 5 years
Income - Joint income of applicant & his brother is net $ 500.
Current Property-
The customer resides in his two room parental house with his parents,
brother, wife & two children . His dream is to continue staying in a joint
family and have their own house where his children would grow up and
have a bright future. They identified a property but had hesitation due to
high interest rates in the market.
When he got to know about the loan structure at Aadhar Housing
Finance Limited he saw a ray of hope and felt Confident. Aadhar
disbursed a loan of $ 21672 and he now sees his dream turning
into reality .