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REPCO FOUNDATION FOR MICRO CREDIT

REPCO FOUNDATION FOR MICRO CREDIT FORMAL & INFORMAL LINKAGES IN INDIAN HOUSING SECTOR Presentation by G. Manickasundaram Project Director GROWTH OF THE INDIAN HOUSING SECTOR – IMPACT Engine of domestic growth Backward & forward linkages with over 269 ancillary industries

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REPCO FOUNDATION FOR MICRO CREDIT

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  1. REPCO FOUNDATION FOR MICRO CREDIT FORMAL & INFORMAL LINKAGES IN INDIAN HOUSING SECTOR Presentation by G. Manickasundaram Project Director

  2. GROWTH OF THE INDIAN HOUSING SECTOR – IMPACT • Engine of domestic growth • Backward & forward linkages with over 269 ancillary industries • Second largest employment generator in the country • Growth in demand is driven by • improved affordability • Lower interest rate • Fiscal incentives • Stable property prices • Rising income levels • Increasing housing needs

  3. FORMAL AND INFORMAL LINKAGES • Informal • Non institutional • Private sources • Money lenders • Traders • Relatives & Friends • NGOs • SHGs • Formal • Banks • Financial Institutions • Capital Market • Cooperatives • NBFCs

  4. SOURCES FOR FINANCE FOR HOUSE CONSTRUCTION (% of monetary cost on construction) Source: NSSO (2004)

  5. THE REPCO GROUP • Headed by Repco Bank- a multi-state Cooperative Sector Institution co- promoted by GOI and Southern States of Tamil Nadu, Andhra Pradesh, Karnataka & Kerala. Head quartered in Chennai, it started operation in 1969 with the main objective of rehabilitating repatriates. The Bank is governed by the Ministry of Home Affairs, Govt. of India. • Repco Home Finance Limited (RHFL), a housing finance subsidiary of Repco Bank started its operation in May 2000 and currently having a housing loan portfolio of Rs.1200 crore with 35 branches across Southern India. • Repco Foundation for Micro credit (RFMC), an NGO promoted by Repco Bank was registered, under Companies Act 1956 (Section 25). It is a not for profit entity for extending supporting services to SHGs financed by the bank solely with a view to increasing the income level and eventually improving the standard of life of the target group. • Repco Infrastructure Development Company Limited (RIDCL), subsidiary of Repco Bank & RHFL came into being in July 2008 with the main objective of implementing PPP projects with Southern State Governments. 5 28-10-2009

  6. Low Income Housing- Repco Experience 6 28-10-2009

  7. Low Income Housing- Repco Experience… 7 28-10-2009

  8. Low Income Housing- Repco Experience…

  9. Low Income Housing- Proposed REPCO Model • Based on our experience so far in dealing with housing for low income, unorganized sector households, the most striking revelation is that owing to traditionally non-income generating nature of investment for housing (for this strata particularly where rental/ speculation is not relevant) there is lack of motivation on part of the beneficiaries. • It is felt that the solution • lies in promoting a Group Housing Concept through SHG Mode. • Hence, REPCO evolved an integrated model for shelter cum income generation for these households through the parent Bank and its 3 subsidiaries-RHFL, RFMC & RIDCL. The core principle of the model would be somewhat similar to NHB’s PHIRA Scheme with executing agencies taking bigger and more active role in implementation. • With group guarantee, even without adequate collateral, mortgage could be created and repayment guaranteed thereby addressing the problems of non-availability of property title and income proof. 9 28-10-2009

  10. Low Income Housing- Proposed REPCO Model Working of the Model Activity Role Effectiveness Organizing SHGs involved in similar activity • Promoting SHGs • Vocational Training • Marketing of SHG Products • Income could be assessed based on the prevailing market rates of SHG products and sales volume • There would also be credit linkages. • Follow up and recovery at lower cost Construction of Shelter cum work shed • Assessing the shelter area requirement and work area requirement • Providing technical support • Planning the layout • Construction & delivery Preparing estimates / expenditure budget, avoiding delay in construction or abandoning construction , providing technology support, low cost housing Financial Assistance • Providing funding • Arranging for refinancing from concerned institutions Taking care of initial margin requirement through family labour and locally available materials of beneficiary 10 28-10-2009

  11. BENEFITS OF THE SCHEME • Provides shelter to the poor downtrodden. • Gives opportunity for the unorganized labourers to own houses. • To benefit Women Self Help Group members to renovate their houses. • Shelter loan improves sustainability and the relationship among their members.

  12. THANK YOU

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