India’s Micro Housing Finance Corp raises $5.5m in new equity funding

MHFC began operations in June 2009 and serves those working in the informal sector, such as self-employed mechanics, housemaids or security guards, with an average monthly household income of INR8-25,000. Its mico-mortgages are usually around INR500,000 (not exceeding 85% of the cost of the house) for a maximum period of 15 years at 12-14% interest rate, with the house serving as security for the loan.

MHFC currently has INR1 billion in housing loans outstanding, with cumulative loans sanctioned now at INR1.65 billion.

"In the last 3 years, MHFC has successfully demonstrated a viable financial model for the low income families who are typically excluded from the mortgage finance market," said Geeta Goel, director at the Michael and Susan Dell Foundation. "They are amongst the lowest cost housing finance companies operating in this segment of the market."

MHFC operates in Mumbai, Pune, Ahmedabad, Surat, Jaipur, Nagpur, Indore, Bhopal and Kolkata.

MHFC's chairman, Madhusudhan Menon, said the new capital should accelerate the geographical reach and depth of the lender's operations.

Caspian and the Dell Foundation previously invested INR250 million and INR190 million in 2009 and 2011, respectively. Following this latest round of funding, MHFC's equity now stands at INR770 million, with debt raised for lending at a similar level.

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• Topics
• South Asia
• Financials
• Expansion
• India
• Financial Services
• Growth capital