c


Presented by: Priya Jain PGDM IV Semester BBDNITM, Lucknow HOUSING FINANCE
INDUSTRY IN INDIA «a seminar on business policy report presentation

c


APPROACH INTRODUCTION ENVIRONMENTAL ANALYSIS MARKET OF HOUSING

FINANCE AND RELATED ISSUES RECOMMENDATIONS AND SUGGESTIONS

c


INTRODUCTION

c
 

HOUSING FINANCE Housing finance connotes finance (or loans) for meeting the various
needs relating to housing, namely: a) Purchase of a flat or house b) Acquisition of a plot, and
construction of a house c) Construction of a house d) Extension of a house e) Repairs, renovation
and upgradation of a house/flat f) Taking over housing loans from other banks/housing finance
companies. Create & meet a growing housing demand Reduce poverty Prevent slum
proliferation Engine of equitable economic growth Take part in financial sector liberalization
IMPORTANCE

c



STRUCTURE RBI NATIONAL HOUSING BANK (NHB) Commercial Banks Housing

Finance Companies Cooperative Institutions HUDCO HDFC Bank Sponsored Insurance
Companies sponsored Private Sector Companies Apex Cooperative Housing Federations State
Cooperative Banks Urban Cooperative Banks State Cooperative Agri. & Rural Banks

c


1951 2003 2020 2015 1980 entry stage growth stage maturity stage saturation stage LIFE
CYCLE Simple Segmentation Small Product Range Random Customer Segmentation
Substantial National Advertising Measurement of sales success by key figures Less examination
of customer satisfaction Credit process compatible to segmentation Regular customer calls
Increasing defaults
c


BUSINESS CYCLE

c
 

ENVIRONMENTAL ANALYSIS

c


INFLUENCING FACTORS SOCIO-CULTURAL Lifestyle changes Family break-ups Growing

population Regional shifts Increase in working force Impact of generation Y ECONOMIC
TECHNOLOGY REGULATORY Reserve Bank of India requirements National Housing Board
requirements Fiscal concessions Interest rates Lower output volatility Inflation Hardware
improvements Software improvements Econometric modelling

c


PORTER¶S FIVE FORCES ANALYSIS RIVALRY WITHIN THE INDUSTRY

BARGAINING POWER OF SUPPLIERS THREAT OF NEW ENTRANTS BARGAINING
POWER OF CUSTOMERS THREAT OF SUBSTITUTES HIGH HIGH MEDIUM MEDIUM
HIGH

c


SWOT ANALYSIS STRENGTHS WEAKNESSES OPPORTUNITIES THREATS An active

mainstream sector Effective regulatory framework Interest rate war persistent Increasing
Urbanization Housing microfinance has potential Tax rebates on house loans Falling interest
rates Lower transaction levels in realty sector High switching costs of customers NHB¶s
refinance assistance mainly directed towards developed players Extensive network of regional
banks, microfinance institutions, cooperatives, credit unions and rural banks Dilution in due
diligence on part of lenders is a often seen Lack of uniformity of norms Increase in default rates
Lower SLR and CRR with enhance liquidity, so more loans can be offered Higher cost of home
ownership is mainly dampening the demand at other end

c


VALUE CHAIN ANALYSIS PRODUCT DEVELOPMENT BACK ±END PROCESSING

RISK MANAGEMENT DISTRIBUTION TECHNOLOGY market knowledge best practice
transfer introducing successful market vehicles to better target new segments with innovative
products clearance settlement efficiency and cost management allows for price flexibility,
creating competitive advantage credit controls CRM expertise experience in managing risk
allows companies to charge high premiums while managing their NPL¶s online loaning cross
selling expanding branch networks and distribution platforms improves direct access to customer
base CUSTOMER BASE

c


MARKET OF HOUSING FINANCE & RELATED ISSUES

c
 

INDIA ± a potential market HOUSING SHORTGAGE CATEGORIES OF HOUSING LOAN

DEMAND

c



INDIA ± a potential market MORTGAGE PENETRATION HOUSING FINANCE

DISBURSEMENT

c


MARKET SHARE

c


FUNDING SOURCES Various sources of funding for housing finance companies include :
Public Deposits Term Deposits Institutional Borrowings (domestic and international) Capital
Markets Foreign Currency Convertible Bonds Refinance from NHB Securitization

c
 

MARKETING & DISTRIBUTION Aggressive but mature marketing strategies pursued

Extensive use of electronic and print media and mobile telephony Co-hosting or sponsoring
property exhibitions Entering in special tie-ups with developers Roping in celebrities as brand
ambassadors ³Feet-on-street´ selling approach Emergence of a new distribution arm ³Direct
Selling Agents´ Cross selling of products and services

c

RECOMMENDATIONS & SUGGESTIONS

c


RECOMMENDATIONS BROAD BASING THE MARKET Mortgage insurance Need for an

independent floating rate benchmark Introduction of new products REGULATORY ISSUES
Need for a level playing field Removal of conflicts of interests Greater uniformity of standards
Asset liability management FUNDING ISSUES Need for diversified resources Enhancement of
exposure norms BUILDING AN INFORMATION DATABASE BETTER ACCESS TO
CREDIT HISTORY OF CLIENT

c


CHALLENGES HOW TO GET TO TRUE POOR ? Microfinance for housing Remittance

mortgages IMPACTING THE SUPPLY SIDE Increase house production via developer
financing Ensure affordability CREATING NEW PRODUCTS/RELATIONSHIPS TO
EXPAND IMPACT POLICY CHANGES Affordable land use and development rules Smarter
housing finance related subsidies Efficient registration of property titles and liens Framework for
long term mortgage securities

c


HOUSING FINANCE INDUSTRY IN INDIA «³better a hut on the ground than a castle in the
air´ THE END