Post on 09-Apr-2018
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Housing Microfinance:NHBs Initiatives
P.R.JaishankarAssistant General Manager
National Housing Bank
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PRESENTATION STRUCTURE
Housing: An Agent for Financial Inclusion
Housing and Housing Finance
Housing Micro Finance: Role of NHB
Housing Micro Finance: NHBs Experience
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HOUSING: AN AGENT FOR FINANCIAL INCLUSION
Housing has direct impact on employment andincome generation - An engine for Equitable andBalanced Economic Growth.
Impact in terms of Improved habitat, Living,Educational, Social and Cultural standards leading toHuman Capital Formation and thereby the futureIncome capabilities
Improved productivity leads to enhanced Income,
Savings and Repayment potential on sustainable lines Sustainable Human Settlement: An Effective tool
towards Financial Inclusion with FinancialStability and Social Inclusion
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HOUSING DEMOGRAPHICS
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HOUSING SHORTAGE
Housing Shortage estimate at the end of the 10thPlan:
24.7 million for 67.4 million households
Expected to increase to 26.53 million units for 75.01million households by end of 11th Plan period
99% of the shortage exists in EWS / LIG segments
Pressure on Urban Services due to Migrating populace.
Still vast non-formal segments remain un-served.
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HOUSING & FUND REQUIREMENT 2007-12
Particulars Housing Requirements (2007-12)
(in million units)
Funds Requirements (2007-12)
(in 000 crores)
R U T R U T
Additional Houses 32 16 48 344 645 989
Of which
EWS including BPL, MAPL 14 7 22 36 74 110
Upgradation of Existing Pucca/
Semi Pucca/ Katcha Houses
23 9 32 35 24 59
Total (Additional Houses +
Upgradation / Repairs etc.)
55 25 80 379 669 1048
48 million additional houses are required during Eleventh Plan Period2007-12;
There is need for diverse sources of finance and diverse financialinstruments
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Institutional Finance Emphasis on loans above Rs.5 lakhs
Source: BSR, RBI & T&P, NHB Reports
CAGR No. of Accounts - 12.3%CAGR O/s Housing Loan - 28%
Housing Finance Market is
Value Driven rather then Volume Driven
Increased emphasis on loan categories
above Rs. 5 Lakhs Trend Continuing
Increased emphasis in lending
in Metropolitan areas
Rural Housing Finance stagnant at 10%
(Source: BSR Reports, RBI)
Need to develop New Financial Architecture
forAffordable Housing
CAGR on Housing Loans of SCBs for 2000-06
2
.49
40.
4
81.
56
103.
6
14.
33
42.
38
81.
6
102.9
6
13.
2
41.
44
81.
93
105.3
3
-10
.09
-6.
15
-6.
19
-20
0
20
40
60
80
100
120
140
upto 0.25 L >0.25 L to 2 L > 2 L to 5 L > 5 L to 10 L > 10 L to 25 L
Loan slabs (Rs. in Lakhs)
CAGR(%)
Accounts Credit Limit Outstanding Loan
CAGR on Housing Loans of HFCs (2002-06)
-1.
22
6
52
-10
0
10
20
30
40
50
60
upto 1 L >1 L to 3 L > 3 L to 5 L > 5 L to 10 L > 10 L
Loan Slabs (Rs. in Lakhs)
CAGR(%)
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AFFORDABLE HOUSING
Housing is the combined matrix of following elements:
Land Supply and Management; Land Use Optimization;
Infrastructure On-site and Off-site;
Building Technology, Materials and Labour;
Finance; Equity/Capital and Borrowing
Liquidity
Profit Component;
Affordability:
A Relative Term Depends on Income/Capacity to afford the above elements.
Target Segment Affordability (Deepak Parekh Report):
Price: 4 times Gross Annual Household Income, AND
Carpet Area: upto 600 sft, AND
Rent: Upto 30% of Monthly Household Income8
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MICROFINANCE: TOOL FOR POVERTY ALLEVIATION
Emergence of Microfinance to enable institutional creditflow to the poor and replace informal credit sources
Microfinance: "Theprovision of thrift, credit and otherfinancial services and products of very small amounts to the
poor in rural, semi-urban and urban areas for enabling themto raise their income levels and improve their livingstandards
Enhance the poor households to
Increase income
Building assets
Empowerment
Active partners in development process
Reduce their vulnerability in times of economic stress
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Microfinance Sector
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Client Base: 22.6 million (2009) 13.2 million Rural; 9.4 million Urban YoY Growth 60%
Total Outstanding Microfinance Loans: Rs.35,939 crore (09) Loan Portfolio of MFIs: Rs.11,730 crore (09)
At current levels Microfinance constitutes 1.29% of Gross BankCredit of Scheduled Commercial Banks Average Loan Size: Rs.5400/- (4200/- in 2008)
38% of clients with average loan size over Rs.10,000/- Constitution:
Non Banking Finance Companies
Not for Profit MFIs (Sec 25 Co.s, Public Trusts, Societies) Mutually Aided Cooperative Societies
Market Shares: 34 NBFCs 76% of overall MF Portfolio; 133Societies -10%
Penetration: Greater in Southern Region 54% of Clients ; 58% of loans
Source: Micorofinance India: State of Sector Report 2009
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MICRO FINANCE INSTITUTIONS:EFFECTIVE DELIVERY CHANNELS
Timely and adequate credit and other financialservices to the poor at their doorstep - an edge
Credit histories of the poor borrowers
Good systems and procedures for giving andcollecting loans. Most of the MFIs have maintained recovery rates
in excess of 95%. Very few MFIs have ventured into providing
housing loans to the poor.
Need to tap the potential of MFIs which canprovide housing loans to the poor.
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NHBs STRATEGY FOR FINANCIAL INCLUSION
CUSTOMIZED FINANCIAL PRODUCT INTERVENTION:
RURAL HOUSING:
Supplementing Government Schemes
Productive Housing in Rural Areas
Financing SHGs - Partnership Approach - NGOs/MFIs/Sec.25
Rural Housing Development Fund
URBAN HOUSING:
Supplementing Govt. Schemes e.g. JNNURM Financing SHGs Partnership Approach - NGOs/MFIs/Sec.25
Slum Redevelopment and Up-gradation
Integrated Township Development Projects (PPP projects)
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HOUSING MICROFINANCE: NHBs ROLE
Focus Un-served and Under-served Housing Micro Finance (HMF)
Integrated Habitat Approach Productive, Income Generating Housing Savings-induced Housing Incremental Housing Water and Sanitation, Women oriented
Partnership approach MFIs, Community Based InstitutionsFinance, Co-finance,Capacity building,Portfolio Securitization,Equity support to Rural HFCs
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NHBs HMF KEY FEATURES
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Amount of
Loan
Generally 2 to 7 times larger than average micro-credit loans
Loan Term 2 - 5 years for improvement and up to 10 years for fresh
construction
DeliveryChannel
Framework
Housing Micro Finance Institutions Non Government Organizations
Societies registered underSocieties Registration Act, 1860 Section 25 Companies
Any other institution approved by Govt. / RBI forpurposes
of undertaking microfinance
Security /Collateral
Hypothecation of Book debts Agreement to mortgage
Groupguarantee of SHGs
Otherforms of security like FDRs, etc.
Wherevertitle deeds are available, they are mortgaged.
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Selection of
borrowers
Poor people (in Urban and Rural areas) with means of
repayment like artisans, craftsmen and people in the
informal sector. Should have completed atleast 3 loan
cycles successfully with MFI.
Co-Financing
MFIs
A productive loan may also be extended by MFIs (as co-
finance) to enhance repayment capacity.
OtherSalient
Terms
MFI Borrowers to on-lend to SHGs.
Trackrecord forwith MFI borrower.
Members of SHGs to have successfully completed atleast
three loan cycles.
HMF KEY FEATURES
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HMF: RISKS AND MITIGANTS
Risks: Affordability of Borrowers Viability of MFIs Limited access to medium and long term funds Insecure land tenure
Requirement of high element of savings Difficulty in obtaining Group GuaranteeMitigants:
Proper selection of clients Seasoned clients
Flexible funding mechanisms
Insistence on Standard Corporate Governance of MFIs Need for co-ordination between formal credit institutions to
mitigate geographical concentration risks
Capacity building Training, Research and Development
Use of information technology & Micro insurance
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NHBSIGNIFICANCE OF HMF
Creation of Assets
Enhanced Social Security
Increased Productivity
Increased Bargaining Capacity
Increased Volume of Business
Saving in Recurring Expenses
Providing Sustainable Employment
Women Empowerment
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NHBs INITIATIVE
NHB has experience in HMF on pan India basis.
Leading Micro Finance institutions across the countryare partnering with NHB for rolling out HMF
programmes for their members. Financial support is provided on self sustainable lines.
Composite loan products are being promoted toimprove the viability of the programme by helping in
increasing income of beneficiary. Separate Water and Sanitation component in the
housing has been included to improve penetration ofsanitation facilities.
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NHBs Partnership with UN Habitat
NHB and UN Habitat have signed Agreement ofCooperation for collaborating in the field of waterand sanitation in India.
Delivery of credit to targeted segments at relativelylow interest rates for water and sanitation facilities isenvisaged through the Micro Finance Institutions andUrban local Bodies.
Typical HMF loan under this programme to have twoparts
Housing loan for construction / repairs /upgradation / incremental housing (at competitiverates) - with NHB funds
Loan for water and sanitation facilities (atsubsidized rates) - with UN Habitat support
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(Rs. in Crore) Sanctions Disbursements Houses
Rural 33.55 17.80 6289
Urban 48.12 11.88 9318
Total 81.67 29.68 15607
20
5.25
3028.3
2.6 2.49
20.41
0
10
20
30
40
2006-07 2007-08 2008-09
NHBs FINANCIAL ASSISTANCE TO HMF
Madurai, TN
Mumbai, Maha
Warangal, AP
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NHBs HMF STATE-WISE
S.No State Sanction Disbursements Houses
1 Andhra Pradesh 24.55 8.07 2801
2 Assam 0.30 100
3 Gujarat 10.00 0.30 1300
4 Karnataka 14.00 10.89 2475
5 Maharashtra 5.82 3.16 147
6 Orissa 7.00 4.50 1085
7 Tamil Nadu 19.00 2.26 7576
8 Kerala 1.00 223
Total 81.67 29.68 15607
(Rs. in Crore)
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SHG housing at Tirupati, Andhra Pradesh
A house before sanction of NHB loan
A house after construction aided by
NHB loan
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NHBSlum Rehabilitation Project, Mumbai
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A house constructed in Madurai A house constructed in Sivaganga
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Tamil Nadu
House in Pudukottai House in Sivaganga
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House constructed in Warangal (AP) House Constructed in Hanamkonda (AP)
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A Few Toilet Designs
Toilet designs under implementation by one of the
MFI partners of NHB27
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HOUSING (MICRO)FINANCE: IN SUM
Vast untapped market Urban and Rural Market based inclusive finance feasible, and Requires range of:
Customized financing products, Risk mitigants, Securitization Viability gap funding (in certain segments), Specialized Delivery systems,
Dedicated Financial intermediaries, Capacity building
An entirely Specialized financial architecture forHousing Microfinance
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NHBs MARKET DEVELOPMENT ENDEAVOURS TOWARDSCREATION OF APPROPRIATE FINANCIAL ARCHITECTURE
Risk MitigationMortgage Credit Guarantee
Title IndemnityCredit Guarantee Fund
Securitization: Creation of Secondary Mortgage MarketLiquidity and Credit Enhancement
Other MeasuresCapacity building Training, Research and Development
A Specialized HMF Corporation
Equity Support
Facilitating Regulations
THE WAY FORWARD
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Thank You
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