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Micro Housing Finance Corporation

Micro Housing Finance Corporation. National Housing Bank - Asia Pacific Union: Housing Finance January 30-31 2012 New Delhi. India’s Housing Shortage. The Market LIG housing shortfall: 25 MM units LIG housing market size: Rs. 5-10 tr The Social Need

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Micro Housing Finance Corporation

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  1. Micro Housing Finance Corporation National Housing Bank - Asia Pacific Union: Housing Finance January 30-31 2012 New Delhi

  2. India’s Housing Shortage The Market • LIG housing shortfall: 25 MM units • LIG housing market size: Rs. 5-10 tr The Social Need • Even if houses built, 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 Worli Slum, Mumbai

  3. About MHFC Vision • To help urban low income / financially excluded families own a home Philosophy • Value for Money for Many • Market Driven Solutions to address social issues; • Inclusive Approaches to Lending; • Sustainable and Scalable; • Deploy best in class technologies Strategy • Similar to other HFCs (product / processes / spreads) except (a) customer segment (b) project based Chandrakant Kharvi, Welder in Mumbai

  4. 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) • Fees: 1% sanction; NIL prepayment • Security: mortgage of the house being financed • Covenants: Bank Account (ECS) / Insurance Kailash Naikwade, Tailor in Pune

  5. Our Status • Incorporated June 2008 / NHB license Feb 2009 / Commenced operations inJune 2009 • Equity Capital: Rs. 36.5 cr • Total Amount Sanctioned:Rs. 52 cr • Total Amount Disbursed:Rs. 30 cr • Average Loan Size: Rs. 4 lakhs • Average LTV: 65% • Average Tenor: 12 years • Past Dues (till date): 0 • Number of Approved Projects: 50 Bharat Sharma, Tailor in Indore

  6. Our Customers • Average MHI: Rs. 8,000 to Rs. 20,000 • Primary employed in the informal sector • Breakup of Portfolio by Occupation TypeI • Average HH Size: 5 • Households with multiple earning members • Currently living in rental housing or illegal tenements • Aspiration to own their own homes

  7. Our Challenges Customer • Awareness (projects / MHFC) • Credit (untested / self exclusion) • Time to decide (so outbooked) • Pricing going up (out of reach) Construction (Builder) • Delivery risk • Changing Segments • Low Priority Capital • Debt (Tenor / Pricing / Start Up) • ECBs not permitted • NHB Refinance is post fact and based on outstandings Ibrahim Shaikh, Garage Servicer in Mumbai

  8. MFIs & Housing Finance Advantages • Knowledge of the target (informal sector) market • Customer acquisition and outreach • Credibility • Collection mechanisms Roadblocks • Long term lending • Interest rate mis-match / adjustment • Localized operations • Lack of clarity on regulations Jalinder Mhoprekar, Spice Vendor in Mumbai

  9. Conclusions HFCs Risk Management & Back Office Capabilities MFIs Customer Acquisition & Collection Mechanisms + Rahul Singh, Auto Servicer in Thane Successful Micro Mortgage Finance

  10. 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

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