Microfinance Focus, April 16, 2011: After a successful first phase of Housing Microfinance project in district of Yavatmal in Maharashtra (India), Swarna Pragati Housing Microfinance Ltd is now eying to cover a thousand families in the next three months. Swarna Pragati, a New Delhi based company claims that it is the first dedicated Housing Microfinance product by any housing finance company in India.

The housing loans are provided either for fresh construction or for renovation/repairs of their existing houses.  Loan amounts average Rs. 25,000 to Rs 1,00,000 with average loan terms of 24-42 months. Work sheds for an integral part of our housing loan product with necessary ware and sanitation facilities. Borrowers complete the construction of their homes through a series of loans thus they don’t have to wait until they can afford a whole-house mortgage, said the company.

Swarna Pragati has adopted a concept of modular or incremental housing, under this model -income families build their houses one step at a time. They add water and sanitation facilities to a basic house, improve roofing and gradually add new rooms and financing is done for one or more modules at a time keeping in view the psychology of seeking short term loans with affordable repayment installments (EMIs)

Swarna Pragati employs an operational modal which is similar to the SHG-Bank linkage model. SHGs are finance directly by the Company and partner NGO/MFIs act as their Business Correspondent. Partner NGO/MFIs are responsible for the collection of repayments and supervision.

The company claims that it does not require a title to guarantee the loan and is willing to accept less formal types of collateral, making the financing more accessible to low-income borrowers. While providing housing loans Swarna Pragati model also extends loans to clients where the title of the land is in the name of the husband/or other family members or there are joint rights to the land/house without specific title documents, on the basis of the Panchayat certificate and an indemnity bond/undertaking executed by the husband/concerned family members.