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Micro Housing Finance Corporation

Micro Housing Finance Corporation. Micro Mortgages for Low Cost Housing 32 nd Meeting of the National Housing Bank New Delhi | August 30 2011. CONTENTS. The MHFC Story About MHFC Our Product Our Customers Our Projects Our Locations Current Status Partnerships Technology Challenges

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Micro Housing Finance Corporation

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  1. Micro Housing Finance Corporation Micro Mortgages for Low Cost Housing 32nd Meeting of the National Housing Bank New Delhi | August 30 2011

  2. CONTENTS The MHFC Story About MHFC Our Product Our Customers Our Projects Our Locations Current Status Partnerships Technology Challenges Recommendations Contact Us Worli Village Slums, Worli, Mumbai

  3. THE MHFC STORY • 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 Formal & Informal Low Income Housing, Prabhadevi, Mumbai

  4. THE MHFC STORY 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 BDD Chawl, Worli Naka, Mumbai

  5. ABOUT MHFC 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 MHFC customer Kailash Naikwade in Sadashiv Peth, Pune

  6. OUR PRODUCT • 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 Work in progress at Om Shanti Nagar II in Lamba, Ahmedabad

  7. OUR CUSTOMERS • 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 MHFC customer Badri Thakur at his salon in Fanaswadi, Mumbai

  8. OUR LOCATIONS MHFC currently has an active presence in over 35 projects across Urban India: Mumbai Pune Nagpur Surat Ahmedabad Indore Kolkata

  9. CURRENT STATUS • NHB COR received inFebruary 2009 • Capital received: Rs. 36.5 crores • Commenced operations inJune 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

  10. TECHNOLOGY • 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 MHFC customer Bharat Sharma in Meghdoot Nagar, Indore

  11. PARTNERSHIPS • 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 MHFC customer Jalinder Mhoprekar in Crawford Market, Mumbai

  12. 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

  13. RECOMMENDATIONS 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 Vaishnavi Sai Complex in Virar (E), Mumbai

  14. RECOMMENDATIONS 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 MHFC customer Chandrakant Kharvi in Bhayendar, Mumbai

  15. CONTACT US Micro Housing Finance Corporation # 3 Victoria Building, 1st Floor SA Brelvi Marg, Off Horniman Circle Fort, Mumbai 400001 Tel: (022) 2266 0130 or 0427 Email: contact@mhfcindia.com Website: www.mhfcindia.com MHFC customer Laxman Thorat in Crawford Market, Mumbai

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