India Financial Inclusion Fund and Michael & Susan Dell Foundation make the first equity investment in the micro mortgage finance space.
-- Micro Housing Finance Corporation (“MHFC”) has raised Rs 25 Crores as an equity commitment in its first round of external funding from the India Financial Inclusion Fund (“IFIF”) and the Michael & Susan Dell Foundation – the first of its kind in the affordable housing finance space. Incorporated in May 2008, MHFC is a housing finance company based in Mumbai and focused on the lower income group of the urban community, specifically those in the informal sector.
According to MHFC Chairman, Madhusudan Menon, “This underserved segment is estimated to represent more than 90% of the workforce, but has almost no financial institution catering to its housing finance needs. Microfinance has paved the way to lend to this segment in an economically sustainable way, but its focus is on short term loans. We hope that MHFC will be able to take this process further and move towards supporting longer term financing requirements, especially for an important basic need like housing.”
MHFC received its license from the National Housing Bank in February 2009 and began operations in June 2009. The Company aims to provide long-term housing finance to urban lower income families, particularly informal sector clients who cannot provide documentary evidence of their income and thus cannot access mainstream banks and other housing finance companies. 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 and a rate of interest currently between 12% and 14% per annum.
Mona Kachhwaha, Director-Investments at Caspian Advisors Private Limited, a microfinance-focused investment firm that provides advisory services to IFIF, said “Despite the presence of many strong mortgage lenders in India, home loans have not been easily available to lower income segments and the primary reason for this is the informal nature of borrowers’ occupations. MHFC is the first institution that will specifically target this segment, and we are excited to be partnering with them in this groundbreaking venture. We are also encouraged by the recent growth activity among developers who are focused on developing affordable housing stock for the low-income segment.”
With its project-led approach, MHFC will tie up with developers who have a similar focus on urban affordable housing – defined by MHFC as flats which have a final price of approximately Rs. 5-6 lakhs. Thus far, the company has tied up with several developers, most recently with Tata Housing on its “Shubh Griha” project located at Boisar – a project which has 1500 flats priced between Rs. 3.9 and 6.8 lakhs. MHFC is also looking to partner with state housing boards and provide loans to beneficiaries under housing schemes for economically weaker sections.
“MHFC is poised to be an effective catalyst for the development of a housing finance industry focused on the low income and informal sector clients. This will bridge the glaring gap present in the housing stock for this segment of society. Innovative credit assessment techniques supported by income level benchmarks coupled with strong internal controls will be critical to the success of this initiative”, said Geeta Goel, Portfolio Director, Microfinance at the Michael & Susan Dell Foundation.
Notes to Editor
ABOUT MICRO FINANCE HOUSING CORPORATION: MHFC is a housing finance company with its headquarters in Mumbai, India focused on serving lower income groups in urban areas, specifically those in the informal sector. MHFC, through this initiative, seeks to efficiently and sustainably enable access to housing finance services to the underserved and un-served segments of the urban population. For more information on MHFC, please visit http://www.mhfcindia.com
ABOUT INDIA FINANCIAL INCLUSION FUND: IFIF, set up in August 2008, is an India-focused microfinance equity fund based in Mauritius and is advised in India by Caspian Advisors Private Limited. IFIF is focused on making equity investments in microfinance institutions and microfinance enablers in the country that are directly or indirectly associated with bringing about the financial inclusion of the poor. For more information about Caspian Advisors and funds advised and managed, please visit http://www.caspian.in
ABOUT MICHAEL & SUSAN DELL FOUNDATION: The Michael & Susan Dell Foundation (www.msdf.org) is dedicated to improving the lives of children living in urban poverty around the world. With offices in Austin, TX, New Delhi, India, and Cape Town, South Africa, the Dell family foundation funds programs that foster high-quality public education and childhood health, and improve the economic stability of families living in poverty. The foundation has committed more than $530 million to global children's issues and community initiatives to date.
Journalists and Bloggers
Visit India PRwire for Journalists (http://www.indiaprwire.com/subscription/) for releases, photos, email alerts and customized feeds just for Media.
Source/Permanent Link: http://www.indiaprwire.com/pressrelease/financial-services/2009101435869.htm
© Copyright 2017. India PRwire (http://www.indiaprwire.com/) - A Dark Blue Technologies Company