it has been some time since we have updated the status of MHFC...
the happy stuff first..we are now fully operational and have disbursed our first few loans..many more are in various stages of processing....MHFC's tie up with Tata Housing for the Shubhgriha project is also generating customers from all walks of life who could not have accessed mortgage finance from formal sources..
every loan tells its own story, and we are now trying (unsuccessfully so far) to document the impact of the mortgages on our customers lives..
we are refining our processes and improving response times to customers, and trying to do all the right things..but there are some things beyond our control...like taxes, like interest rates...
a significant part of the cost of a home is taxes..collected at every point...excise duties, sales tax, octroi, service tax, stamp duty etc etc..this is estimated at over 40% of the cost of the house. If the government is serious about addressing the problems of housing the poor, one easy way would be to waive these taxes for home values below Rs 500 thousand. This would be easier and more transparent than the current methods of hidden subsidies and high costs of collection of multiple taxes..
coming to interest rates...we have to find a way to reduce the cost of capital to this segment..MHFC interest rates are a function of its cost of borrowing and cost of operations. HDFC SBI etc obviously have a lower cost of capital and better access to capital markets than a start up like MHFC. we intend to work hard at this because we know that our target segment is highly sensitive to interest rates..
more next time...
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