Micro Housing Finance Corporation (“MHFC”), a housing finance company that is focused on financially excluded urban lower income families, has crossed 500 loans in sanctions, aggregating Rs. 20 cr. MHFC’s customers include mostly individuals employed in the informal sector, ranging from self employed vegetable vendors and barbers to salaried employees like housemaids, drivers and security guards.
According to Madhusudhan Menon, Chairman – “Rs 20 crore in loan sanctions is a key milestone as it represents the reinforcement of an idea which has not been tested by any financial institution till date. These numbers, and the fact that we have no past dues on our portfolio, establish a strong case for lending to this segment and that customers who have adequate but undocumented incomes are good credit risks for secured mortgage lending. Most importantly, from a social perspective, we believe that every MHFC loan has improved the quality of life of large families currently living in deplorable urban conditions.”
Housing Loan License
MHFC received its license from the National Housing Bank in February 2009 and began operations in June 2009. Its first Rs 10 cr in sanctions took a little over a year with the second Rs 10 cr being sanctioned in just over 4 months. Loan amounts are usually around Rs. 5 lakhs (not exceeding 80% of the cost of the house) for a period not exceeding 15 years, with the house serving as security for the loan. Its rate of interest is currently between 12% and 14% per annum.
MHFC has a project-led approach and ties up with developers, both public and private, who have a similar focus on urban affordable housing (as defined as being in a price range not exceeding Rs 10 lakhs). Partnerships include tie-ups with builders like Tata Housing, Poddar Developers and Usha-Breco Realty in Mumbai. MHFC also has an active presence in Pune, Ahmedabad and Kolkata, and is currently operational in over 25 low-income housing projects across the country. The company plans to expand its outreach to Chennai, Bengaluru, Meerut and the NCR over the coming year.