BASIX Equity for Equity HOUSING MICROFINANCE PRACTITIONERS WORKSHOP Presented by: B.S.Vasu BASIX
Why one should have the house? BASIX Equity for Equity • Housing is one of the three basic human needs viz ; Roti(Bread), Kapda(Cloths) and Makan(House). • Ever since the origin of life mankind has been striving to arrange for these basic requirements and continues to do so even today. • Housing enables us endure the vagaries of nature. • Various studies have pronounced that people having house are more social, Law-abiding and conscientiousness about the others’ inconveniences; besides having better health and contented life. • Housing is pre-requisite for individuals’ intellectual &economical growth and social stability.
BASIX INDIA-Housing Demographic details Equity for Equity Source: NHB report
BASIX Equity for Equity
INDIA -HOUSING & FUND REQUIREMENT BASIX 2007-12 Equity for Equity Particulars Housing Requirements (2007-12) Funds Requirements (2007-12) (in million units) (INR in ‘000 Millions ) R U T R U T Additional Houses 32 16 48 3440 6450 9890 Of which EWS including BPL, 14 7 22 360 740 1100 MAPL Upgradation of Existing 23 9 32 350 240 590 Pucca/ Semi Pucca/ Katcha Houses Total (Additional Houses + 55 25 80 3790 6690 10480 Upgradation / Repairs etc.) • 48 million additional houses are required during Eleventh Plan Period 2007-12; • There is need for diverse sources of finance and diverse financial instruments Source: NHB report
BASIX Equity for Equity •WHAT IS THE NECESSITY OF INTRODUCING THE HOUSING PRODUCT BY BASIX?
BASIX Concept on Housing BASIX Equity for Equity • Housing, particularly for persons with low income levels, –is more than a shelter or an asset that is consumed or invested • Housing can be an asset for –protection of the family –production platform –income generation • Existing formal housing finance system has, by and large, by-passed the poor. • Hence the need for housing micro finance
BASIX BASIX concept on Housing Cont’d… Equity for Equity ◊ Housing has direct impact on employment and income generation - An engine for Equitable and Balanced Economic Growth ◊ Impact is in terms of improved habitat, living, educational, social and cultural standards leading to human capital formation and thereby the future income capabilities ◊ Improved productivity leading to enhanced income, saving and repayment potentials on sustainable lines
BASIX Credit business model BASIX Equity for Equity • DELIVERY MECHANISM/STRUCTURE • LOAN PRODUCTS • HOW HOUSING LOANS FIT IN TO OUR MISSION/OPERATIONS – LIVELIHOOD – SYNERGY
BASIX UNIT STRUCTURE BASIX Equity for Equity UNIT HEAD UA, TA and OA FX1 FX2 FX3 FX4 FX5 LSA1 LSA2 LSA3 LSA4 LSA5 LSP1 LSP2 LSP3 LSP4 LSP5 FX: FIELD EXECUTIVE LSA: LIVELIHOOD SERVICE ADVISOR LSP: LIVELIHOOD SERVICE PROVIDER UA: UNIT ACCOUNTANT TA: TRANSACTION ASSISTANT OA: OFFICE ASSISTANT
BASIX LOAN PRODUCTS BASIX Equity for Equity LOAN SIZE LOAN SIZE DURATION DURATION ( Months ) LOAN PRODUCT (Rs) LOAN PRODUCT (Rs) (Months) Crop loans(101) 25000(Max.) 11 SHG’s/CAG’s/CIGs (107) No Limit 24 Crop loans-veg(121) 25000(Max.) 18 Fed. Of SHGS & MACTS(115) No Limit 36 Agri.-invest-land House repairs & 25000 development(102) 150000(Max.) 36 extension(113) (Max.) 36 Gruha Samruddhi (for new Agri.-invest- Houses & Extension)- 150000 Irrigation(125) 150000(Max.) 36 (123) (Max) 84 25000 Agri. Allied-Dairy(103) 150000(Max.) 24&36 Energy Loan(126) (Max.) 36 Agri. Allied- 25000 Non dairy(117) 50000(Max.) 24 Water &sanitation(127) (Max.) 36 Education Loan for 150000 Micro Enterprise(104) 50000(Max.) 24 Professional (120) (Max) 48 Growth Micro Education loan for 50000 Enterprise (106) 200000(Max.) 36 Vocational(122) (Max) 24 Gen. purpose women 20000 & JLG.(108) 8000(Max.) 18 Vehicle Loan Employees(114) 40000 36 ROSCAS(110) 100000(Max) 24
WHY BASIX IS INTERESTED IN PROVIDING BASIX Equity for Equity HOUSING LOANS • LIVELIHOOD: As a part of its mission BASIX is providing housing loans to their customers. If any person is not having the house means he has not settled properly and livelihood promotion is not complete. • SYNERGY: Some of the customers after getting sustainable livelihood with BASIX services, they will be interested in constructing the house . In such cases we help our customers in constructing the house and in turn they will generate employment for others.
EVOLUTION OF HOUSING PRODUCT IN BASIX BASIX Equity for Equity Demand Collaboration With DID Survey Need of Data Housing 1 Product for Analysis BASIX Releasing of Product final product Design Product Pilot
BASIX-DID COLLABORATION BASIX Equity for Equity DID has collaborated with BASIX to Evaluate the potential demand for micro housing in Indian Market and to develop the loan product for micro housing. Need for collaboration in INDIA: •In India the financial institutions are basically targeting middle class and upper class sections of the society for providing housing loans and the needs of the lower class are totally ignored. •To fill this gap BASIX has come forward to launch the Micro Housing loan Product (Gruha Samruddhi) and help the lower and middle class people in fulfilling the their housing needs.
DEMAND SURVEY BASIX • Two methods we have used to know the demand for housing Equity for Equity 1) survey with questionnaire. 2) Focus group discussions. • Initially a Pilot Survey was done with 30 households each in three locations . • Based on the feedback given by our SMG in pilot study review meeting, we have redesigned the housing demand questionnaire and conducted the actual survey in all the three locations • Sample locations: • Metro – Hyderabad Urban Slums • Urban – Mahabubnagar Urban Slums • Rural – Mahabubnagar Rural Villages • Sample Size: Covered a total of 389 Households in 44 sample locations • 6 Focus Group Discussions have been conducted in three sample areas.
DATA ANALYSIS BASIX Equity for Equity Parameters Considered for survey: 1. Proposed type of construction. 2. Estimated Cost of proposed Construction 3. Amount willing to borrow by the households. 4. Expected interest rate for the loan 5. Monthly installment willing to pay 6. Income categories of households 7. Various Sources of Borrowing.
DATA ANALYSIS (1.Proposed type of construction) BASIX • Among the three sample locations 43% Equity for Equity of the respondents are willing to Construct New Houses • 13% of the respondents have opted for Extensions for Rental purpose • And same 13% have opted for Extension for Household Purpose • Only 11% of the respondents have opted for Repair of Roof .
Propsed type of Construction Multiple Construction BASIX 100% Repair of Floor Equity for Equity Repair of Walls 80% Repair of Roof 60% Construction of Bathroom 40% Construction of Toilet Construction of Kitchen 20% Additional room for Household 0% Additional room for Rent METRO URBAN RURAL Additional room for Business % % % Construction of New house Sample areas
DATA ANALYSIS BASIX (2.Estimated cost of proposed Housing) Equity for Equity • Among the total respondents.. • 34% - estimated their cost as above Rs. 1,50,000/- • 19% - estimated between Rs. 1,00,000 to Rs. 1,50,000/-. • 31% - estimated between Rs. 50,000/- to 1,00,000/- • 13% - estimated as below Rs.50,000/-.
BASIX Estimated cost of proposed housing Cont’d… Equity for Equity Estimated Cost of the Proposed Project 50% 40% 30% Below 50,000 20% 50,000 - 1,00,000 10% 1,00,000 - 1,50,000 0% Above 1,50,000 METRO URBAN RURAL ALL % % % %
DATA ANALYSIS ( 3.Housing Loan Demand ) BASIX Equity for Equity • It is observed that among the total respondents, more than 78% of the respondents are willing to borrow below Rs. 1,50,000/-. • 20% - below Rs. 50,000/- • 40% - Rs. 50,000/- to Rs. 1,00,000/- • 18% - Rs. 1,00,000/- to Rs. 1,50,000/- • 22% - Above Rs. 1,50,000/-
Housing Loan Demand Cont’d… BASIX Equity for Equity Housing Loan Demand Amount willing to borrow METRO % URBAN % RURAL % All % Below 50,000 10 8% 30 27% 38 24% 78 20% 50,000 - 1,00,000 37 30% 47 43% 71 46% 155 40% 1,00,000 - 1,50,000 27 22% 13 12% 30 19% 70 18% above 1,50,000 46 37% 20 18% 17 11% 83 21% No Idea 3 2% 0% 0% 3 1% Grand Total 123 100% 110 100% 156 100% 389 100%
DATA ANALYSIS ( 4.Costumers Expected rate of Interest) BASIX Equity for Equity • Among those total no. of respondents more than 58% of them are expecting an interest rate less than 12% per annum . • And 39 % of the total respondents expected an interest rate ranging between 12 to 24 %.
Customers Expected Rate of Interest Cont’d… BASIX Equity for Equity Expected interest rates Location wise Number and % of respondents Expected Interest Rate METRO % URBAN % Rural % All % Below 12% 67 54% 67 61% 93 60% 227 58% 12%-24% 48 39% 40 36% 62 40% 150 39% 24%-36% 8 7% 1 1% 0% 9 2% Na 0% 2 2% 1 1% 3 1% 100 100 100 Grand Total 123 % 110 % 156 % 389 100%
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