Micro Housing Finance Corporation

Micro Mortgages for Low Cost Housing

32nd Meeting of the National Housing BankNew Delhi | August 30 2011

CONTENTSThe MHFC Story

About MHFCOur Product

Our CustomersOur Projects

Our Locations

Current StatusPartnershipsTechnologyChallenges

RecommendationsContact Us

Worli Village Slums, Worli, Mumbai

The Urban Context

30% of population is urban, living on less than 2% of the country’s land

In Maharashtra, 60% of the total population is now urban; in Mumbai, 54% of the city’s population lives in slums in less than 4% of its land

India’s urban population (285 million) has increased five fold over the past 50 years, and is projected to keep increasing to reach 50% of the total population in the next 30 years

THE MHFC STORY

Formal & Informal Low Income Housing, Prabhadevi, Mumbai

The Market• LIG housing shortfall: 25 mn units • LIG housing market size: Rs. 5-10 tr• Mortgage finance market size: Rs. 4-8 tr

The Social Need• 90 % of workforce employed in informal

sector• Monthly earnings: Rs. 5,000 to 30,000• Excluded from mainstream housing

finance

MHFC seeks to bridge this gap

THE MHFC STORY

BDD Chawl, Worli Naka, Mumbai

Vision• To provide micro mortgage solutions

for the urban poor

Philosophy• Market Driven Solutions to address

social issues• Inclusive Approaches to Lending• Sustainable and Scalable • Deploy best in class technologies

ABOUT MHFC

MHFC customer Kailash Naikwade in Sadashiv Peth, Pune

• 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

Work in progress at Om Shanti Nagar II in Lamba, Ahmedabad

• 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 CUSTOMERS

MHFC customer Badri Thakur at his salon in Fanaswadi, Mumbai

MHFC currently has an active presence in over 35 projects across Urban India:

Mumbai

Pune

Nagpur

Surat

Ahmedabad

Indore

Kolkata

OUR LOCATIONS

CURRENT STATUS• NHB COR received in February 2009

• Capital received: Rs. 36.5 crores

• Commenced operations in June 2009

• Total Applications Received: 1231

• Total Loans Sanctioned: 1020

• Total Amount Sanctioned: Rs. 41.15 crores

• Average Loan Size: Rs. 4 lakhs

• Number of Approved Projects: 35

NB: All numbers updated as of August 26, 2011

Dream City apartments and row houses in Indore

MHFC seeks to use mobile / telecom technology and data to:

• Enhance Credit: customer spending on mobile phones as a proxy for earnings

• Act as a Platform for: Product delivery EMI collection Communication with customers

• Reduce cost per transaction / customer interaction

TECHNOLOGY

MHFC customer Bharat Sharma in Meghdoot Nagar, Indore

PARTNERSHIPS

MHFC customer Jalinder Mhoprekar in Crawford Market, Mumbai

MHFC seeks to partner with:

Banks• Front-end product delivery• Customer information sharing

Housing Finance Companies• Two-way customer referrals

NGOs, MFIs & Employers• Outreach: customers and employees• Information dissemination and

marketing

CHALLENGES: Customer Outreach Awareness

• Lack of awareness on affordable housing options and formal housing finance

Self Exclusion• Ineligibility self exclusion from

seeking housing options

Creditworthiness• Establishing credit credentials

Cost Escalation• Appreciation of flat prices faster than

increases in customer incomes

MHFC customer Rahul Singh in Boisar, Thane

RECOMMENDATIONS

Vaishnavi Sai Complex in Virar (E), Mumbai

Develop Long Term Debt Markets• Reduce asset liability mismatches• Improve access to off-shore markets

Priority Sector Definition• Special status for loans <Rs. 10 lakhs

Lower Capital Requirements • For small ticket size loans

Targeted Refinance Lines• For loans < Rs. 10 lakhs

External Capital Borrowings

RECOMMENDATIONS

MHFC customer Chandrakant Kharvi in Bhayendar, Mumbai

Automatic SARFAESI eligibility• Eligibility for SARFAESI upon receipt of

COR from the NHB

Facilitating Downpayments• Customers have reasonable current

incomes but low savings. Allow HFCs to accept EMIs in advance to build up down payments.

Educational Loans• Provision of education / vocational

lending for customers’ children to enable future repayment capacity

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.com

CONTACT US

MHFC customer Laxman Thorat in Crawford Market, Mumbai