By Accommodation Times News Services
Micro Housing Finance Corporation Ltd. the Mumbai based company, lending home loans to low income households to help them to by their dream homes is showing good progress and has grown into a multi-million dollar business making loans across the country. The company had began as a small entity to grant loans to slum dwellers in the city for housing is still working on the same concept at a much bigger platform. The company is now operating in 15 cities and in every part of the country South, North, East and West.
“Housing finance companies focus on serving the top 3% to 5% of the population because it’s easier and cheaper,” to give big loans to rich people, said Madhusudhan Menon, chairman of Micro Housing Finance. “No one wants customers who don’t have documentation of their income.”
Adding more to this issue, as per the report by real-estate consultancy Jones Lang LaSalle they have mentioned that the lack of home loans to those most in need of them is one of the main reasons more than 90% of India’s acute housing shortage of around 19 million units falls on the urban poor.
Microfinance institutions typically give poor entrepreneurs loans of less than 5,000 rupees to start small businesses. Micro mortgages are much larger loans, usually between 100,000 rupees and one million rupees. While the housing loans don’t generate income for the borrower in the way a micro business would, they are just as crucial for low-income families seeking upward mobility. The loans give the families a financial asset as well as a sense of ownership and also protect them from rising rents.
MHFC says it is serving a particular type of low-income customer who actually makes money, but just can’t prove it in a way most banks would accept. Its clients can afford homes but they can’t get loans from a typical lender, said Mr. Menon. As there is rarely a paper trail of pay slips or credit card payment histories to use to rate potential borrowers, MHFC assesses them through interviews with the applicant, employers and others who work in the same industry.
The company has disbursed almost 5,000 loans since it was founded in 2008, but has not had a single defaulter, said Mr. Menon.