Tuesday, September 2, 2014

DDA Housing Scheme 2014 opens - 25,034 flats on sale

Some announcements regarding new MHADA flats that will be available in 2014 - about 25,000 flats of which about 90% expected to be under EWS (pricing expected at between 7 and 11 lakhs).

Times of India
Economic Times
Business Today

"We are offering 25,034 flats in the 2014 scheme out of which 22,627 would be one-bed room apartments." said Balvinder Kumar, Vice-chairman, DDA. 

"The 'DDA Housing Scheme 2014' would be open to applicants from September 1 and the last date to receive the application is October 9. The draw of lots would preferably be taken out within 20 days of the close of the scheme," a senior DDA official said, adding, applicants can also apply online. 

DDA for the first time has also introduced a five-year lock-in period for ownership of the flats, to cut out the middleman and reduce the scope of speculative buying. Interestingly, a senior official said that from now on, DDA will adopt a practice of announcing a housing scheme only when the flats are in "ready to move-in" condition. "Learning from past experience when flats could not be handed over to allottees even months after draws were held, and we faced a lot of criticism, this time we will announce dates only after ensuring that the flats are ready to move in," said a senior official.

Note that like most developers linked to state bodies and authorities, the DDA will be an automatically approved developer for MHFC. Hence, for housing loans on DDA flats, but only to buyers who are from the informal sector (those lacking salary slips or income tax returns to prove incomes) or financially excluded (who cannot get loans from other housing finance companies easily) - please contact us on 22660427 / 0069 or email us on contact@mhfcindia.com (website www.mhfcindia.com) after allotment and when a loan is required.

Thursday, August 14, 2014

A short cut to financial inclusion

The Central Governments ambitious plan for financial inclusion under the Sampooorn Vittiya Samaveshan (SVS) targets the inclusion of 100 million unbanked households. Is this achievable with the present banking network and mindset? Or is there a short cut?

Consider this. In the 67 years of independence despite the best efforts of the Reserve Bank through regulation, persuasion and coercion, banks have managed to penetrate barely 40% of all households. Even where they have supposedly opened bank accounts a very significant number of the so called “no frills accounts”, have remained dormant, with customers finding no sense in operating these accounts due to lack of access, benefits and products.  It is time to realize and accept that banks have neither the will nor the ability or indeed the technology to achieve the financial inclusion mission. Policy makers need to understand and acknowledge that the current banking infrastructure may not be the most optimum way to reach the unbanked. The brick and mortar model that banks employ is slow and expensive.

Cell phone companies have managed to accomplish a 60% penetration of the total population in one third the time that the banks took, through a mindset that values customers, technology that is cheap to deploy and a product that customers want. It is important to note here that the documentation that is required to get a cell phone account is not a lot different from the set that is prescribed by the RBI for the opening of no frills accounts. They already have developed capacity to handle micro payments, money transfers, and have the data to create sensible credit products that can be delivered cheaply. Most importantly, customers are very used to going to the nearest recharge outlet to load up their phones with airtime.

The communication architecture, the network and technology that these companies have put in place can easily be adapted to achieve the Governments financial inclusion targets. What it only requires is a change in the mindset of policy makers that banks are not the exclusive or effective option for delivery of financial products. Why not consider using the more efficient and effective infrastructure that is already in place.
In practical terms many prepaid customers already consider their airtime as storage of value. A few more sophisticated customers already use it as a payment mechanism. The track records of cell phone usage and bill payment cycles can form an excellent proxy for structuring credit products. Banks starting afresh with new customers will legitimately have concerns about extending credit to newly acquired customers.
Policy makers should seriously consider allowing cell phone companies to either act as full fledged banks. in the alternative allow them to operate as front end with customers, with banks providing the back end processing and balance sheet support.

The Government and the RBI may have the greatest opportunity here to accomplish a policy goal by simply marrying the credit, capital and balance sheet strengths of banks with the marketing, distribution and technology capabilities of cell phone companies.

Monday, July 28, 2014

Mint Article - low income housing

Interesting article this morning (July 28, 2014) on renewed interest from developers in low income / affordable housing -  from leading developers like the Mahindra Group, Ajmera and Shapoorji Pallonji. With more financing available (from several HFCs like MHFC focussed on this segment) and an enabling government environment, we believe that this sector should see many more such plans over the next year.

Mint Article - July 28, 2014

Tuesday, July 15, 2014

DBS Launches New Project - Umang Vatwa

On 26th June 2014, affordable housing company DBS (Design Build Serve) announced a new project named "Umang Vatwa" that will be built in Ahmedabad, Gujarat.

The project will provide both 1 RK and 2RK flats, starting at INR 4.99 lakh. Located close to the railway station and providing modern amenities which include 24/7 water supply, Umang Vatwa is the latest project from DBS that Micro Housing Finance Corporation will partner with to provide housing finance solutions to customers. More information about the project can be found here.

Customers looking for finance options can contact our Manager Kashyap Patel on 9925045276 to check MHFC loan terms and conditions, availability and  general inquiries.

Bookings for the project opened on 12th July 2014. For more information about the project, call the toll free number: 1800-123-6007

Thursday, July 10, 2014

Budget 2014-15 - impact on low income housing

Firstly this is a government that has in its manifesto a "housing for all" objective - by 2022 in fact - and thus there are major expectations of several important measures, immediate and over the next few months, that will promote and support this critical sector. 

In this budget (2014-15), there were some specific measures :

1. FDI can be brought in fairly easily (usual restrictions on min amount and size of project waived) for projects which commit at least 30% for low cost affordable housing (not defined but am sure clarifications will be issued shortly). This will benefit private developers and add another source of capital - which might be useful as financing land purchase is difficult domestically; 

2. Rural Housing Fund (run by the NHB) allocation to go up by Rs 2,000 cr to Rs 8,000 cr. This is the refinance scheme which provides funds to HFCs at a lower cost - while the rates are attractive, and can be valuable in helping EWS / LIG families in rural areas own a home, the issue for most HFCs (esp for newer ones like MHFC) is that this scheme has an onlending cap (2.5% currently) which makes it operationally not viable. We believe the extra allocation to the scheme is very useful, but to make it really effective and to encourage widespread utilisation, the cap should be withdrawn or raised so that it is viable for lenders as well. 

3.  Most critically, and whats seems very positive, but where details awaited,  the FM has proposed setting up a Mission on Low Cost Affordable Housing anchored in the National Housing Bank, under which Rs 4,000 crores has been allocated for the NHB - and where the aim would be to increase the flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.

In general, the FM also stated the openness of the Government to examine other suggestions that would spur the sector reflecting that this would be a priority. So all in all, while nothing very specific and possibly immediate, there does to be a general willingness to make positive changes in the sector and further detailed measures could possibly be announced shortly in line with the overall guidance provided in this Budget speech.