Expanding Housing Finance to the Underserved in South Asia by Tatiana Nenova

Author:Tatiana Nenova [Nenova, Tatiana]
Language: eng
Format: epub
ISBN: 978-0-8213-8322-3
Publisher: THE WORLD BANK
Published: 2010-08-15T00:00:00+00:00

Box C.2 Market-Based, Low-Income Housing Pilot Projects in India

Mumbai Pilot Project

The two “anchor” participants are UTI Bank and Lodha Group. Casabella is a recently completed, 65-unit project at Nalasopara, an upcoming suburb on the western railway line in Mumbai. Lodha Group has started another project at Virar, a suburban town also on the western railway line. UTI Bank recognizes that housing is a problem for its lower-income staff, and would like to help its staff buy apartments. There is strong backing from key senior managers in the organization, and the team working on the pilot project has received clearance to finance these customers. The target group for this pilot project is the drivers of UTI officers. These individuals are not formal employees of UTI Bank (they are employed by the officers themselves), but the bank thinks of them as part of its extended staff. Drivers earn roughly Rs 7,500 a month and thus can afford the housing being proposed by Lodha Group. UTI Bank is willing to provide home loans to the drivers and, potentially, to provide finance to the developer (covering the number of units required for the bank employees).

The pilot project is located at Nalasopara, within about a one-hour commute by train to the city center. The proposed development will have 300 apartments of 225 square feet each (in four-story walk-up buildings. Units will be priced at Rs 325,000.

Ahmedabad Pilot Project

The anchor here is SEWA Bank—a cooperative bank for women, which has a large presence among low-income households in Ahmedabad. The senior managers at SEWA and SEWA Bank are interested in facilitating housing for their employees and clients, and are willing to provide them with mortgages. Gruh Finance is a medium-size HFC with headquarters in Ahmedabad. It has low-income customers and is interested in expanding its portfolio. Gruh is interested in financing the SEWA Bank employees and clients, and is willing to provide construction finance to reliable developers. The project team has identified two developers, Makwana and Gajjar, who work in the areas suggested by the focus group participants and who have good reputations (based on feedback from Gruh, which has financed the developers’ customers). These developers have recently completed projects that are of good quality. Both have access to land and can construct apartments of 260 and 324 square feet at Rs 800 a square foot.

Pune Pilot Project

The anchor, Bajaj Auto, is one of the largest two-wheeler manufacturers in the country. It is interested in facilitating housing for its factory employees and for the employees of six of its vendors. Bajaj is willing to help with the documentation requirements and to do payroll deduction for their permanent employees. Initial discussions with groups of both Bajaj Auto’s and its vendors’ employees have confirmed the employees’ interest in buying housing facilitated by Bajaj Auto, and have helped the project team identify geographic preferences and affordability. ICICI Bank and Dewan Housing Finance have agreed to provide financing to the employees.

Source: Monitor Group 2007.

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