FORMAL _ INFORMAL LINKAGES IN INDIAN HOUSING SECTOR

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FORMAL _ INFORMAL LINKAGES  IN INDIAN HOUSING SECTOR Powered By Docstoc
					               Repco Foundation for Micro Credit

REPCO FOUNDATION FOR MICRO
          CREDIT
     FORMAL & INFORMAL
 LINKAGES IN INDIAN HOUSING
           SECTOR

          Presentation by
          G. Manickasundaram
          Project Director
                                    www.repcofoundation.com
                                         www.repcohome.com
                       Repco Foundation for Micro Credit
GROWTH OF THE INDIAN HOUSING SECTOR –
                    IMPACT
   Engine of domestic growth
   Backward & forward linkages with over 269
    ancillary industries
   Second largest employment generator in the
    country
   Growth in demand is driven by
            • improved affordability
            • Lower interest rate
            • Fiscal incentives
            • Stable property prices
            • Rising income levels
            • Increasing housing needs
                                            www.repcofoundation.com
                                                 www.repcohome.com
                           Repco Foundation for Micro Credit

          FORMAL AND INFORMAL LINKAGES

Formal                     Informal
• Banks                    • Non institutional
• Financial Institutions   • Private sources
• Capital Market              • Money lenders
• Cooperatives                • Traders
• NBFCs                       • Relatives & Friends
                              • NGOs
                              • SHGs




                                                      www.repcofoundation.com
                                                           www.repcohome.com
        SOURCES FOR FINANCE FOR HOUSE
                CONSTRUCTIONd a t i o n f o r M i c r o
                      Repco Foun                                                      Credit
                     (% of monetary cost on construction)
              Own     Friends/    Cooper   Govt.    Private     Private     Money
                      relatives    ative           financial     non-      lenders
                                                               financial
                                   Construction type

New           64.8        9.3      3.2      9.0        1.9       0.6          8.8
Building

Addition to   70.0        7.3      3.1      6.5        0.5       0.1         10.1
floor space

Maintenanc    71.0        8.0      3.3      4.4        0.4       0.4         10.1
e / repair

                                   By structure type

Pucca         65.3        9.2      3.1      8.4        2.0       0.4          9.3
Semi pucca    67.3        8.3      1.6      8.0        0.4       0.9         11.3

Kutcha        70.3        8.2      0.6      2.3        0.2       0.3         15.2


Source: NSSO (2004)
                                                                           www.repcofoundation.com
                                                                                www.repcohome.com
    THE REPCO GROUP
                                Repco Foundation for Micro Credit

    Headed by Repco Bank- a multi-state Cooperative Sector
     Institution co-    promoted by GOI and Southern States of Tamil
     Nadu, Andhra Pradesh,       Karnataka & Kerala. Head quartered in
     Chennai, it started operation in 1969        with the main objective of
     rehabilitating repatriates. The Bank is governed by the Ministry of
     Home Affairs, Govt. of India.

    Repco Home Finance Limited (RHFL), a housing finance subsidiary of
     Repco Bank started its operation in May 2000 and currently having a
     housing loan portfolio  of Rs.1200 crore with 35 branches across
     Southern India.

    Repco Foundation for Micro credit (RFMC), an NGO promoted by
     Repco Bank          was registered, under Companies Act 1956 (Section
     25). It is a not for profit entity for extending supporting services to
     SHGs financed by the bank solely with a       view to increasing the
     income level and eventually improving the standard of life of the
     target group.

    Repco Infrastructure Development Company Limited (RIDCL),
     subsidiary of Repco        Bank & RHFL came into being in July 2008
     with the main objective of implementing   PPP     projects     with 5
     Southern State Governments.
                                                                            28-10-2009
                                                              www.repcofoundation.com
                                                                   www.repcohome.com
  Low Income Housing- Repco Experience
                                        Repco Foundation for Micro Credit



       Areas of concern                               Reasons
1) Non–Availability of Property title      Many own possession rights but not
                                           ownerships.

2) Non–Availability of Income proof        •Unorganized laborers, seasonal
                                           nature of income .
                                           •Applicants working in their own
                                           farm.

3) Non–Availability of House estimates Civil Engineers / Contractors are
/ expenditure budget                   present rarely.


                                                                                     6

                                                                             28-10-2009
                                                                 www.repcofoundation.com
                                                                      www.repcohome.com
  Low Income Housing- Repco Experience…
                                 Repco Foundation for Micro Credit

        Areas of concern                          Reasons
4) Repayment Schedule generation    With seasonal nature of income and
                                    non-regularity, projecting continuous
                                    income stream is difficult


5) Delay in House Construction      Unavailability of Building materials like
                                    bricks.
6) Minimum margin contribution      There is initial delay in contributing
                                    the margin.


7) Abandoning of House              As it is not an income generating
Construction in the middle          activity in most of the cases , they
                                    abandon it mid-way

8) High cost of Administration      Low ticket size and more frequent
                                    need of interaction owing to lack of
                                    awareness                                       7

                                                                            28-10-2009
                                                                www.repcofoundation.com
                                                                     www.repcohome.com
                                Repco Foundation for Micro Credit

Low Income Housing- Repco Experience…
        Areas of concern                            Reasons
9) Need for revising the legal frame (eg) Lands with Tribals / allotted to
work                                 eligible beneficiaries under slum
                                       clearance schemes


10)   Coordination     with     Govt. Roads, Electricity, Water, Schools and
Departments    for     infrastructure Transportation
development

11) Improving the Quality of income All eligible members of the family to
of target group                     be optimally employed.




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                                                                   www.repcohome.com
               Low Income Housing- Proposed REPCO Model
                                   Repco Foundation for Micro Credit
   Based on our experience so far in dealing with housing for low
    income, unorganized sector households, the most striking
    revelation is that owing to traditionally non-income generating
    nature of investment for housing (for this strata particularly
    where rental/ speculation is not relevant) there is lack of
    motivation on part of the beneficiaries.

 It is felt that the solution
 lies in promoting a Group Housing Concept through SHG Mode.


   Hence, REPCO evolved an integrated model for shelter cum
    income generation for these households through the parent
    Bank and its 3 subsidiaries-RHFL, RFMC & RIDCL. The core
    principle of the model would be somewhat similar to NHB’s
    PHIRA Scheme with executing agencies taking bigger and more
    active role in implementation.

   With group guarantee, even without adequate collateral,
    mortgage could be created and repayment guaranteed thereby
    addressing the problems of non-availability of property title and       9
    income proof.                                                   28-10-2009
                                                               www.repcofoundation.com
                                                                    www.repcohome.com
Low Income Housing- Proposed REPCO Model
             Working of the Model
                                      Repco Foundation for Micro Credit

        Activity                     Role                       Effectiveness
                                                          Income could be assessed based on
                            Promoting SHGs                the prevailing market rates of SHG
      Organizing SHGs                                      products and sales volume
     involved in similar    Vocational Training
           activity                                       There would also be credit linkages.
                            Marketing of SHG
                             Products                     Follow up and recovery at lower cost


                            Assessing the shelter
                                                                 Preparing estimates /
                             area requirement and
      Construction of        work area requirement           expenditure budget, avoiding
     Shelter cum work       Providing       technical
                                                                delay in construction or
           shed              support                           abandoning construction ,
                            Planning the layout
                                                             providing technology support,
                                                                    low cost housing
                            Construction & delivery



                            Providing funding                Taking care of initial margin
         Financial          Arranging for refinancing        requirement through family
        Assistance           from           concerned         labour and locally available
                             institutions                       materials of beneficiary
                                                                                                  10

                                                                                          28-10-2009
                                                                              www.repcofoundation.com
                                                                                   www.repcohome.com
                   Repco Foundation for Micro Credit

  BENEFITS OF THE SCHEME
Provides shelter to the poor downtrodden.
Gives opportunity for the unorganized
 labourers to own houses.
To benefit Women Self Help Group
 members to renovate their houses.
Shelter loan improves sustainability and
 the relationship among their members.


                                        www.repcofoundation.com
                                             www.repcohome.com
Repco Foundation for Micro Credit




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                          www.repcohome.com

				
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