How HFCs focussed on affordable housing finance for the informal sector are implementing this goal
Let us first quickly try to understand the task at hand: 20 million houses have to be built and provided to the urban poor by the year 2022. This number includes 18 million slum households and 2 million non-slum urban poor households. This is indeed a gigantic task being implemented with a unique central, state and local government federal push with due facilitation from the private sector. At one instance, if we were to assume that all the houses are ready, the question that arises next is that how do we empower the marginal owners with home finance at genuine rates, in a transparent manner and at optimal credit repayment capability?
Capri Global Home Loans and similar housing finance companies (HFCs) focussed on affordable housing is at the forefront of providing home loans to customers from the informal sector. With an interest subsidy of 6.5% for the maximum loan tenure of 20 years under credit link subsidy scheme (CLSS), the interest share that the actual customer has to bear gets almost halved. This is the greatest incentive that every Indian from the informal sector needs to take advantage of to be able to build his or her DREAM HOME.
HFCs like Capri Global Home Loans are at the forefront of giving shape to home ownership through home finance that is easy, fast and flexible. Informal sector consists of micropreneurs, self-employed and daily wage earning (salaried) individuals. Be it small businessmen with a lathe machine set up, tea stall owner, vegetable vendor, auto rickshaw driver, maid, carpenter, electrician, security guard, driver or plumber, the contribution of these people to India’s urban development is immense and cannot be wished away. So how are we successful in disbursing home loans to our customers?
Home loans with flexible documentation: Today, the informal sector consists of customers who may not have regular documentation or banking footprint as demanded by our traditional banking system. So, does this make them ineligible or unworthy of a home loan? Absolutely not! Today most new-age HFCs are geared towards affordable loan financing. With our due process and systems, we are able to understanding the credit-worthiness of our customers in spite of sparse and haphazard documentation.
For economic weaker section (EWS), annual income has to be less than INR 3 lacs (Rs. 25,000/- per month) and for lower income group (LIG) annual income has to be between INR 3–6 lacs. Today, most of our customers from the informal sector have earnings that fall within these two brackets. The loan application should be a first time home owner.
(Branch) Presence in Bharat and not just in India: In recent times, HFCs with a focus on EWS and LIG customers, have focussed on deepening the branch network in smallest and farthest of urban cities, towns and catchment areas. Previously, financial institutions had limited themselves in cities and premium (high ticket) home lending products, thereby leaving out this segment. With penetration through physical branch presence in every possible urban centre, both city and town, we are able to reach the customer’s doorstep in a friendly, respectful yet result-oriented manner.
By the time PMAY Phase 3 gets completed, every city and town in the country will be covered. In Phase 1, 100 cities have been covered and additional 200 cities will be covered by March 2019 under PMAY 2. Today, Capri Global Home Loans has a presence across five states, where this program is being implemented in a total of 66 branches. Our presence across key urban centers with informal workers is helping us reach our customer set in a time-bound manner, making affordable home ownership a reality for the unbanked India.
A home for every Indian and home finance for every credit-worthy customer through government-led interest subsidy are acting as a game changer in India’s dream to become a self-sufficient and self-reliant nation. And HFCs focussed on the affordable housing sector are acting as agents of change.