‘Attitude of rural borrowers is changing’

Thanks to micro finance, small borrowers have developed repayment habits



Providing housing loans with an average size of ₹10 lakh to rural home buyers is a different ball game, says Anil Sachidanand, MD and CEO of Aspire Home Finance Corporation . The company focuses on small-ticket housing loans for those in non-metros. Excerpts:

How do you assess a borrower’s credit worthiness?

In this segment, we use a blend of quantitative and qualitative parameters to gauge the ability and willingness to repay. This has to be done because the parameters you may use for a farmer would be different from what you use for a weaver.

We take at a more holistic approach by using data that is all encompassing. For instance, how old your children are and how they are studying. If they are in class 7-10 and studying well, there is a definite indication that the customer is trying to ensure that his kids are well educated and would qualify themselves later in life.

Also, unlike urban borrowers, 85 per cent of our loans are to first-time home buyers. These borrowers also have a strong emotional need for a home and park a lot of their own funds, say 35 per cent in their home. This provides additional comfort.

How do you safeguard against legal issues one may face in land ownership?

The approval authorities in non-metro areas have processes that are similar to that in metros. Some of the issues include the property ownership being in the name of the grandfather and the title not transferred after a partition; there may also be boundary disputes pending in court — the land may have been encroached.

We conduct full due diligence through experts on these aspects and try to get the title regularised. Often, even if there are property disputes, it is typically not the reason for non-payment of loan dues.

What are the delinquency levels for this segment?

There is a substantial amount of their own funds, and this being their first house, they are attached to it.

Consequently, the delinquency levels in this segment are low and occur mostly due to medical problem/seasonality in income/unforeseen circumstances. As of June 30, 2016, our gross NPA is 0.22 per cent, which is a testimony of the commitment of these customers to make timely payments towards their monthly instalments.

Are there any additional services you offer to borrowers?

We have a division called MALA (Mahila Awas Loan from Aspire) which helps working women in the low-income segment own a home. Housing loan is offered at affordable rates (10-12 per cent) when the woman is the primary borrower.

We also offer property advisory services to our customers; this helps them select a property from our database of affordable housing projects.

Our legal services help customers in drafting agreements and other required due diligence from the real estate point of view.

We offer technical consultancy services to our customers and small time developers in the affordable housing space to equip them with the technical knowhow on construction and design management.

What may be some positives you see in credit access to rural borrowers?

In the past, borrowing was from informal sources such as moneylenders, chit funds or relatives. It is changing to more formal sources. Institutions are also disbursing the loan faster compared to the long turnaround times of the past.

There is change in the attitude of borrowers too. Instead of seeing loans as something bad, there is more trust placed on institutional lenders. Thanks to microfinance, they have developed repayment habits. Having repaid a small loan of, say, ₹20,000, they are confident of earning, saving and repaying.

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