Urban lower income-focused housing finance company, Micro Housing Finance Corporation (MHFC), has raised Rs 35 crore ($5.4 million) in new equity funding from existing investors including the India Financial Inclusion Fund (IFIF) and the Michael & Susan Dell Foundation (MSDF) besides adding a new investor Unilazer Ventures Pvt Ltd, the personal investment vehicle of Ronnie Screwvala.
The Mumbai-based company is focused on providing housing loans to financially excluded urban lower income families and with the latest funding, MHFC's equity now stands at Rs 77 crore, with a debt funding at a similar level.
At present, IFIF and MSDF hold 37 per cent and 10 per cent stake in the firm, respectively.
The firm counts financial institutions including National Housing Bank, HDFC Ltd and various commercial banks among its lenders.
“Housing loans outstanding for MHFC as on date is Rs 100 crore with cumulative housing loans sanctioned now at Rs 165 crore,” said Rajnish Dhall, CEO & MD, MHFC.
After the funding, the company expects to touch close to Rs 250 crore in cumulative loan sanctions and Rs 150 crore in loan disbursal in the current financial year.
Dhall also added that the company is planning to raise Rs 100 crore in debt funding in the current financial year and would explore the option of further equity funding this year.
“We are adequately funded for FY14 and would need more funding in the next 2 to 3 years, but we may look at more equity this year from the perspective of institutional building.”
The company has provided loans to close to 4,000 families, mostly from the informal sector, ranging from self-employed bamboo straighteners and mechanics to salaried employees like housemaids, drivers and security guards.
MHFC received its license from the National Housing Bank in February 2009 and began operations in June 2009. Its loan amounts are usually around Rs 5 lakh (not exceeding 85 per cent of the cost of the house) for a period of up to 15 years, with the house serving as security for the loan.
Its rate of interest is currently between 11 per cent and 13 per cent per annum for women owners and those defined as from the weaker section by the NHB/RBI. It has a project-led approach and ties up with developers, both public and private, who have a similar focus on urban affordable housing (as defined as being in a price range generally not exceeding Rs 10 lakhs).
MHFC has presence in Mumbai, Pune, Ahmedabad, Surat, Jaipur, Nagpur, Indore, Bhopal and Kolkata, and currently helps finance customers on approximately 150 low-income housing projects.