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ASIAN DEVELOPMENT BANK PCR: IND 30011

PROJECT COMPLETION REPORT


ON THE
Housing Finance Project
(Loans 1549-IND, 1550-IND, and 1551-IND)
IN
INDIA
August 2003 CURRENCY EQUIVALENTS
Currency Unit – rupee/s (Re/Rs)
At Appraisal
20 August 1997
At Project Completion
26 January 2001
Re1.00 = $0.028 $0.21
$1.00 = Rs35.7 Rs46.4
ABBREVIATIONS
ADB – Asian Development Bank
ARDB – Agricultural and Rural Development Bank
AMC – Ahmedabad Municipal Corporation
BME – benefit monitoring and evaluation
CAR – capital adequacy ratio
CFI – community-based finance institution
CBO – community-based organization
FIRE – financial institutions reform and expansion
HDFC – Housing Development Finance Corporation Limited
HFC – housing finance company
HFI – housing finance institution
HUDCO – Housing and Urban Development Corporation Limited
KfW – Kreditanstalt fur Wiederaufbau
MBS – mortgage-backed security
NGO – nongovernment organization
NHB – National Housing Bank
NPA – nonperforming asset
RBI – Reserve Bank of India
SOE – statement of expenditure
TCS – thrift and credit society
USAID – United States Agency for International Development
UK – United Kingdom

NOTES
(i) The fiscal year (FY) of HDFC and HUDCO ends on 31 March, and of NHB, 30
June. FY
before a calendar year denotes the year in which the fiscal year ends, e.g.
FY2001 ends
on 31 March 2001 for HDFC and HUDCO, and 30 June 2001 for NHB.
(ii) In this report, “$” refers to US dollars. CONTENTS
Pa
ge
BASIC DATA iii
I. BACKGROUND 1
A. History 1
B. Scope of Operations 1
C. Relationship with Asian Development Bank and Other Lenders 2
D. Relevance of Design and Formulation 2
E. Related Technical Assistance 3
II. IMPLEMENTATION 3
A. Lending Policies 3
B. Characteristics of Subloans 3
C. Implementation and Internal Operation of Subprojects 5
D. Operational Performance of the Borrowers 6
E. Borrower’s Financial Performance 7
F. Financial Statements and Ratios 8
G. Covenants 8
H. Performance of the Asian Development Bank 9

III. EVALUATION 9
A. Loan Appraisal 9
B. Implementation 11

IV. ASSESSMENT AND RECOMMENDATIONS 11


A. Relevance 11
B. Efficacy in Achievement of Purpose 12
C. Efficiency in Achievement of Outputs and Purpose 12
D. Preliminary Assessment of Sustainability 12
E. Other Impacts 13
F. Overall Assessment 13
G. Lessons Learned 13
H. Recommendations 14
APPENDIXES
1. Loan Utilization 15
2. Details of Subloans 19
3. Lending Channels 26
4. Chronology of Main Events in Project Administration 28
5. Projected and Actual Disbursement of Loan Proceeds 31
6. Organizational Structure 32
7. Lending Operations 35
8. Financial Statements of NHB 36
9. Financial Statements of HUDCO 39
10. Financial Statements of HDFC 42
11. Statement of Compliance with Major Loan Covenants 45 (iii)
BASIC DATA
A. Loan Identification
1. Country
2. Loan Numbers
3. Loan Title
4. Borrowers
5. Name of Development
Financial Institutions
6. Amount of Loan
7. Project Completion Report
Number
India
1549/50/51-IND
Housing Finance Project
National Housing Bank (NHB), Housing and Urban
Development Corporation Limited (HUDCO), and
Housing Development Finance Corporation Limited
Ltd. (HDFC)
NHB, HUDCO, and HDFC
$100 million each to NHB, HUDCO, and HDFC,
totaling $300 million
PCR: IND 759
B. Loan Data
1. Appraisal
- Date Started
- Date Completed
17 July 1997
31 July 1997
2. Loan Negotiations
- Date Started
- Date Completed
25 August 1997
28 August 1997
3. Date of Board Approval 25 September 1997
4. Date of Loan Agreement 6 November 1997
5. Date of Loan Effectiveness
- In Loan Agreement
- Actual
- NHB
- HUDCO
- HDFC
- Number of Extensions
4 February 1998
12 December 1997
11 December 1997
11 December 1997
None (iv)
6. Terminal Date for Commitments
- In Loan Agreement
- NHB
- HUDCO
- HDFC
- Actual
- NHB
- HUDCO
- HDFC
- Number of Extensions
11 December 2000
10 December 2000
10 December 2000
26 December 2002
27 December 2002
22 November 2002
One each
7. Closing Date
- In Loan Agreement
- Revised
- Number of Extensions
30 June 2003
None
None
8. Terms to the Borrower
- Interest Rate
- Maturity
- Grace Period
- Repayment Terms
Market-based loan with a spread of 40
basis points
25 years
5 years
Payable in 40 semiannual installments
commencing December 2002
9. Terms of Relending (if any) Not stipulated
10. Interest Rate for Subloans Market-based rates acceptable to the
Asian Development Bank
11. Disbursements
a. Dates
Initial Disbursement Final Disbursement Time Interval
NHB 31 December 1997 23 December 1999 24 months
HUDCO 31 December 1997 6 December 1999 24 months
HDFC 24 December 1997 26 January 2001 37 months
Effective Date Original Closing Date Time Interval
NHB 12 December 1997 30 June 2003 66 months
HUDCO 11 December 1997 30 June 2003 66 months
HDFC 11 December 1997 30 June 2003 66 months (v)
b. Amount ($ million)
Category
Original
Allocation
Last
Revised
Allocation
Net
Amount
Disbursed
Undis-
bursed
Balance
1. Project
Expenditure 300.00 300.00 300.00 0.00
2. Imprest Account 0.00 0.00 0.00 0.00
Total 300.00 300.00 300.00 0.00
C. Implementation Data
1. Number of Subloans 300
2. Distribution of Subloans by Component

Component
Number of
Subloans
Amount
($ million)
A. NHB: Lending through:
1. Part A :
a. Government Cooperatives
b. Housing Finance Companies
Subtotal (A)
16
70
86
43.56
56.44
100.00
B. HUDCO: Lending through
1. Part A:
a. Government Cooperatives
b. NGOs/CFIs
c. Corporations and Municipalities
Subtotal (1)
2. Part B:
a. Slum Improvement Projects
b. Workshed-cum-Shelter Projects
Subtotal (2)
Subtotal (B)
67
23
83
173
21
1
22
195
35.28
1.68
56.24
93.20
6.78
0.02
6.80
100.00
C. HDFC: Lending through
1. Part A:
a. Government Cooperatives
b. Companies
c. Corporations and Municipalities
d. Directly to Households
Subtotal (C)
3
5
10
1
19
12.76
32.75
16.77
37.72
100.00
Total 300 300.00
NGO = non government organizations, CFI = community-based finance
institutions. (vi)
3. Project Performance Report Ratings
Ratings
Name of
Institution
Implementation
Period
Development
Objectives
Implementation
Progress
NHB Nov 1998–Feb 1999 S S
Mar 1999–Dec 2002 HS HS
HUDCO Nov 1998–Feb 1999 S S
Mar 1999–Dec 2002 HS HS
HDFC Nov 1998–Feb 1999 S S
Mar 1999–Dec 2002 HS HS
S = satisfactory, HS = highly satisfactory
D. Data on Asian Development Bank Missions
Name of
Mission
Date No. of
Persons
No. of
PersonDays
Specialization
of Members
a
Fact-finding 22 Apr–7 May 1999 8 112 h, g, c, I, b, i, o
Appraisal 17–31 Jul 1997 5 75 h,g,j,I,n
Inception 19–29 Jan 1998 4 44 h,I,k
Project Review 1 12–22 Oct 1998 2 22 b,I
Project Review 2 1 Dec 1999–23 Feb 2000 2 I,g
Disbursement
Review 1
6–18 Mar and 4–5 Apr 2000 2 30 f,I
Disbursement
Review 2
24 Jul–10 Aug 2000 2 36 f,g
Disbursement
Review 3
10–16 Jan 2001 2 16 f,I
Disbursement
Review 4
26 Feb–10 Mar 2001 2 18 f,l
Disbursement
Review 5
3,11–12 Apr 2001 1 3 f
Disbursement
Review 6
23–25 May 2001 1 3 f
Audit Review 1 4 Jun–8 Aug 2001 2 78 I, m
Disbursement
Review 7
27 Jun–9 Jul 3 27 f, b,g
a
a-engineer, b-financial analyst, c-counsel, d-economist, e-
procurement/consultant specialist, f-control
officer, g-programs officer, h-environment specialist, i-staff consultant, j-urban
development specialist,
k-Assistant operations analyst, l-staff consultant, m-auditor, o-resident
representative, India Resident
Mission.
b
This Project Completion Report was prepared by M. Ravi, Financial Officer;
Tanuka Endow,
Consultant; and assisted by Michael Gomes, Senior Administrative Assistant,
India Resident Mission. I. BACKGROUND
A. History
1. The National Housing Bank (NHB) was established in July 1988 as the apex
body for the
housing finance sector. NHB is wholly owned by the Reserve Bank of India (RBI),
the central
bank. NHB's three primary responsibilities are to (i) mobilize resources for the
housing sector,
(ii) promote the development of housing finance companies (HFCs), and (iii)
regulate their
operations.
2. The Housing and Urban Development Corporation Ltd. (HUDCO) was
incorporated in
April 1970 as a wholly government-owned company to promote housing and
urban
development, particularly for low-income and economically weaker sectors.
HUDCO is
registered under the Companies Act as a public limited company and managed
by a
government-appointed board of directors. HUDCO’s operations are divided
between housing
and infrastructure finance, mainly through state and local agencies, with some
direct assistance
to individuals under the HUDCO Niwas scheme besides assistance to some
privately sponsored
projects. HUDCO is mandated to lend at least 55% of its funds to low-income and
economically
weak sectors.
3. The Housing Development Finance Corporation Ltd. (HDFC) was established in
1977 as
a public limited company to provide housing finance to individuals. As the first
private HFC, its
operations grew rapidly and it continues to be the market leader in the retail
housing finance
sector despite the emergence of a number of HFCs.
1
B. Scope of Operations
4. As a housing finance promoter, NHB financially supports HFCs and facilitates
access to
institutional credit. NHB provides refinancing to 31 HFCs, commercial banks, and
cooperative
sector housing finance institutions (HFIs). The bulk of NHB’s assistance is in the
form of
refinance to eligible primary HFIs in the public, private, and cooperative credit
sector. As a
housing finance regulator, NHB sets prudential norms for capital adequacy ratio
(CAR), income
recognition, asset classification, and provisioning on HFCs’ nonperforming
assets. In January
1999 the NHB board approved a new refinancing scheme for community-based
financial
institutions (CFIs) under which any approved institution, mainly HFCs, can avail
themselves of
refinance for loans made to CFls. To augment sector resources, NHB has issued a
number of
mortgage-backed securities (MBS). In collaboration with Canada Mortgage
Housing
Corporation, NHB promoted a mortgage credit guarantee company for which the
Asian
Development Bank (ADB) has approved equity assistance.
2
5. HUDCO provides credit for housing and infrastructure development through
government
and privately sponsored projects; develops and disseminates low-cost and eco-
friendly
construction technology; builds capacity in the sector through training, research,
and
consultancy; helps implement housing and urban infrastructure projects secured
by state
government guarantees; and assists privately sponsored projects. With the
emphasis on fiscal
reforms in the recent years, the ability of the states to provide guarantees has
been constrained,
thus limiting state-guaranteed assistance by HUDCO. Its direct lending window to
individuals is
a recent response to these changes.
6. HDFC has promoted home ownership by providing finance through a wide
variety of
products. Besides giving direct loans to individuals, which account for most loans
(73% by
FY2002), HDFC has also added to housing stocks through loans to corporations
and state

1
ADB. 1995. PCR for the Karnataka Urban Infrastructure Development Project.
2
ADB. 2002. India Mortgage Guarantee Company for $10 million under the
private sector window. 2
agencies. Its associates include property management, credit-rating, consumer
finance,
infrastructure finance services, asset management, insurance, and commercial
banking
companies.
C. Relationship with ADB and Other Lenders
7. The Project was the first loan to HUDCO and NHB. ADB had provided a loan
of $20
million to HDFC under the Karnataka Urban Infrastructure Development Project,
3
which targeted
lending for low-income housing and slum improvement. ADB has supported
technical
assistance (TA) for capacity building
4
In October 2001 ADB also approved TA to assess the .
role of MBS
5
.

8. Other external assistance for the housing finance sector comes from
Germany, Japan,
Netherlands, United Kingdom (UK), United States, and World Bank. Germany has
extended
several lines of credit through Kreditanstalt fur Wiederaufbau (KfW) to HUDCO
and HDFC for
low-income housing and rural building centers throughout the country. HDFC has
also received
UK funds and assistance from the United States Agency for International
Development (USAID)
under its Housing Guarantee Program. NHB borrowed $25 million of an
authorized $40 million
from USAID to expand refinancing operations. USAID, under its financial
institutions reforms
and expansion (FIRE) program provided HUDCO with $125 million. Japan
provided NHB $250
million.
9. International funds constitute 6-7% of the total resource needs of HUDCO
and HDFC,
and about 12-15% of NHB’s. The main sources of NHB and HUDCO funds include
domestic
bonds/debentures subscribed mainly by local banks/institutional investors, some
of which enjoy
fiscal/regulatory incentives. By contrast, HDFC relies significantly on public
deposits (45% of
total funding requirements) and domestic borrowings from banks and financial
institutions (about
48%).
D. Relevance of Design and Formulation
10. The Government gives priority to expansion of low-income housing as the
country has a
housing shortage. The housing sector requires an enabling environment to
mobilize investment.
India’s Ninth Five-Year Plan (1997-2002) identified housing and housing finance
as a priority. At
the request of the Government, in September 1997 ADB approved the first
housing finance
project to help India achieve the long-term objectives of the National Housing
Policy. The $300-
million project was approved for implementation through three national HFIs:
NHB, HUDCO,
and HDFC.
11. The ADB loan was considered when the Government was introducing policy
reforms and
legislative changes that would release land for development and improve the
efficiency of
housing markets. The Project was designed to pursue ADB’s human
development goals by
undertaking the following:
(i) expand the volume of financial resources available to the sector, especially
to
meet the needs of low-income groups,
(ii) catalyze the development and use of new financial instruments and
procedures
that will give the poor greater access to credit, and

3
ADB. 2002. India Mortgage Guarantee Company .
4
ADB. 1997. Technical Assistance to India for Strengthening Housing Finance
Institutions and Restructuring State
Level Housing Institutions.
5 ADB. 2001. Technical Assistance to India for Assessing the role of Mortgage
backed Securities. 3
(iii) support and quicken the pace of policy reform sector-wide, to induce greater
efficiencies.
The Project was conceived to ensure participation of formal agents in housing
finance, informal
agents such as nongovernment organizations (NGOs) and CFIs, besides
involvement of the
government and beneficiaries. The Project sought to integrate the formal and
informal housing
finance mechanisms, channel funds to low-income households (LIH) and
strengthen the
housing finance sector and widen its outreach under three components: (i)
lending through
CFIs, HFIs, companies, and households (part A), (ii) lending for slum
improvement and lowincome housing projects (part B), and (iii) equity to new
and existing HFCs (part C).
E. Related Technical Assistance
12. The Project does not have an attached TA. However, ADB has approved,
concurrently
with this Project, two advisory TAs and one small-scale TA (para. 7).
II. IMPLEMENTATION
A. Lending Policies
13. NHB’s lending policies have evolved over the years in response to the
transformation of
the Indian financial sector from a regulated to a more market-oriented one.
Commercial banks
have been increasing their housing finance portfolio recently, and the
institutional infrastructure
for it has been expanding significantly. Market forces and falling interest rates
have compelled
NHB to be more nimble in responding to market indicators and altering its terms
of refinance.
The agency has introduced MBS issues, a market-oriented intervention to raise
funds.
HUDCO’s housing and urban infrastructure assistance mainly support
government-sponsored
and -guaranteed programs, but the agency has recently opened a direct lending
window for
retail clients. HDFC’s corporate objective is to provide market-based loans for
home ownership.
The agency continues to be commercially oriented, adopting a customer-
centered approach and
improving operational efficiency and use of technology.
B. Characteristics of Subloans
14. The Project was designed with three broad components:
(i) Part A: Lending through CFIs, HFIs, companies, and households. This
component provides for finance through: (a) government-supported CFIs such as
cooperative housing societies and cooperative rural development banks and
HFIs, (b) nongovernment CFIs such as thrift and savings societies organized
voluntarily, and (c) direct lending to households or large private companies for
workers’ housing needs.
(ii) Part B: Lending for slum improvement and LIH projects. Designed to have
participation of the benefiting community, local authorities, private sector, and
borrowers, this part comprises three types of subprojects: slum networking,
workshed-cum-shelter, and enhanced productivity-cum-shelter for LIH to
establish homebased business or income generating activities.
(iii) Part C: Equity to new and existing HFCs. This component was intended to
expand the housing finance system. ADB did not allocate funds for this purpose,
but NHB, using its own funds, was to help refinance at least eight HFCs.
15. The project funds were fully utilized by the three borrowers to lend through
multiple
channels (Appendixes 1-3). Under part A, the three borrowers together lent $293
million through
various channels: (i) cooperative societies ($91 million), (ii) state governments,
municipal bodies
and local authorities ($73 million), (iii) privately or publicly owned corporations
($33 million), (iv) 4
nongovernment CFIs, thrift societies or groups ($2 million), (v) HFCs ($56
million), and (vi)
directly to individuals ($38 million). Against the target of 50%, 62% of project
funds were lent to
low-income groups. The Project assisted a variety of initiatives to enable
beneficiaries to own
their homes. Loans through cooperative housing societies helped individuals
build their own
houses and were generally demand induced. Loans through housing boards,
slum improvement
boards, and municipal/local authorities were supply driven, with the
subborrower usually
implementing government-sponsored schemes to build shelter for subsequent
allotment and, on
occasions, to relocate a slum. Loans to private corporations were to create
housing stocks to
house subborrowers’ employees. One of the subloans was to rehabilitate people
affected by a
large dam.
16. The target under part A has been exceeded by $33 million, with a
corresponding
underachievement under part B. Under part A, lending to cooperatives was
more than
estimated, by $16 million, and that to companies, municipalities, HFCs and
households, by $35
million. Lending through CFIs/NGOs, however, has been short of expectations by
$18 million,
with the entire assistance channeled through HUDCO, since HDFC preferred to
use cheaper
KfW sources and internal accruals.
17. Under part B, $6.8 million was channeled to slum improvement and
workshed-cumhousing schemes against the target of $40 million. Slum
improvement has traditionally been
funded with state resources or with institutional funds channeled through state
agencies and
guaranteed by state governments. The Project aimed to use a new approach—a
participative
process among the various stakeholders—to upgrade slums. However, HUDCO
routed the
entire assistance under the component through traditional channels, while HDFC
did not onlend any funds for such schemes. The subprojects typically involved
construction of alternate
dwelling units for squatters, and basic infrastructure such as water, drainage,
sanitation, etc. As
the Project was implemented, it became clear that more promotional efforts are
required before
we can realize the potential benefits of participative process. Effective and
bankable slum
networking subprojects that could have been assisted were lacking. Even the oft-
cited
Ahmedabad slum networking project did not produce the originally envisaged
outcome, with the
community’s contribution not as estimated. Even this limited contribution from
the community
was met without recourse to loans from mainstream financial institutions such
as HUDCO,
HDFC, etc.
6
18. Under part C, NHB has, on its own, been expanding the institutional sources
of housing
finance through selective equity support and refinance to HFCs. The number of
NHB-approved
HFCs increased to 31 from 25 when ADB approved the Project. The HFCs
together disbursed
an estimated Rs150 billion during FY2002 (Rs.46 billion during FY1997). NHB’s
initiatives in
setting up the first mortgage guarantee company and supporting MBS issues are
other efforts to
expand and strengthen the housing finance system.
19. Subprojects assisted were to meet the cost of 219,449 units against
estimates of
360,000 in the report and recommendations of the President (Appendix 2).
Although the
absolute numbers fall short of estimates, the share of low-income groups (87%)
exceeded
expectations (75%). Considering the close linkage between asset ownership and
eventual
improvement of human welfare, the loan helped improve LIHs. The Project was
expected to
result in leverage of investment up to four times. Based on project costs as
estimated by the
borrowers, the leverage varied from 1.3 to over 2.3.
7
However, these do not include expenses
for land and substantial additional investments by beneficiaries to improve
facilities, which were

6
ADB. 1999. Technical Assistance to India for Strengthening Microfinance
Institutions for Urban Infrastructure
Finance.
7
ADB reimbursed 100% of the loans given by the borrowers. Had ADB restricted
the refinance level, the Project
would have delivered even higher leverage. 5
funded by personal savings and informal credit. Reckoning these additional
investments and
expansion in credit facilitated by the increased number of NHB-approved HFCs
and
development of MBS, effective leverage would be much higher.
20. Five states (Tamil Nadu, Kerala, Maharashtra, Gujarat, and Andhra Pradesh)
accounted
for over 85% of loans (excluding those coursed through the HFCs and a small
part of the retail
portfolio for which data were not readily available) (Appendix 1, Table A1.3). This
pattern mirrors
loan distribution by HUDCO and indicates proactive state sponsorship of, and
support to,
housing programs. Even HDFC reflects this pattern although the agency’s retail
portfolio is
heavily concentrated in Maharashtra. The Project encouraged lending to reform-
oriented states,
which may partly explain this phenomenon.
21. Recovery rates of subloans varied based on the delivery channel and
character of the
subproject. For about one third of the loan amounts channeled by HDFC or NHB
through HFCs
directly to individuals and corporations, recovery rates from the ultimate
beneficiaries were very
good.
8
The Project also included a third of the funds lent through cooperatives, with an
implied/overt government guarantee to the borrowers. The review missions
9
noted that recovery
was unsatisfactory, varying from 5% to 80%, depending on states’ forbearance
and prevalence
of alternative subsidized state programs that discouraged timely debt servicing.
About 28% of
the funds were lent for schemes initiated by the state governments, local or
municipal
authorities, where repayment to the borrowers had an implied government
guarantee. The
schemes were for a variety of purposes. Loans to the state government were
usually for house
building advances for staff, who usually repaid from their salaries. Other
schemes were dwelling
units built by state or local bodies, which were sold under outright purchase or
hire purchase or
lease schemes. Recovery performance under these schemes is inconclusive due
to insufficient
data.
C. Implementation and Internal Operation of Subprojects
22. The loans were quickly disbursed to all the borrowers within the first 3 years
of
implementation (Appendix 5). The borrowers adopted the imprest account
procedure and
submitted all claims under the statement of expenditure (SOE) procedure for
liquidation and
replenishment. Subsequent SOE and project review missions, however, found
that the
borrowers did not adequately follow ADB implementation guidelines. A number
of claims were
ineligible mainly due to inclusion of subloans disbursed before the date of
effectiveness, and
sometimes due to inadequate supporting documents. The borrowers, who were
implementing
an ADB project for the first time, were not familiar with ADB procedures and
documentary
requirements. Funds reach the ultimate beneficiaries through a number of
intermediaries, on
whom the borrowers normally rely to keep records of loans. The
borrowers’/subborrowers’
record-keeping system did not always separately identify ADB-funded
subprojects. State
government guarantees on subloans resulted in slack record keeping and
information feedback.
In case of direct loans to the ultimate beneficiaries or to NGOs/nongovernment
CFIs, however,
due diligence during the entire approval and monitoring process was satisfactory
and in line with
internal procedures. Based on the subsequent feedback from the borrowers, ADB
approved
substitutions of ineligible subloans with eligible ones.
23. Direct loans to individuals and HFCs are generated from the demand side
and, hence,
generally completed. HUDCO has reported that about 86% of the planned
dwelling units are
completed, as substantiated by sample reviews of cooperative housing finance
schemes by

8
HDFC’s nonperforming loans (NPLs) has been consistently very low at about
1%. Assisted by NHB, HFCs also
had good recovery rates, with NPL below 3%.
9
ADB review missions were fielded on 12-22 October 1998, 1 December 1999-23
February 2000, 6-17 March
2000, 24 July-10 August 2000, 26 February-10 March 2001, 23-25 May 2001, etc.
6
ADB missions, random audit missions, and staff consultants. Subloans for slum
improvement/housing schemes by slum improvement/housing boards/other
authorities are
generated from the supply side. Sometimes these schemes are hampered by
resistance from
slum dwellers. Implementation of such government-sponsored schemes also
suffered from poor
financial state of the agencies and absence of accountability. Of the 3,604
dwelling units
planned under the slum improvement schemes, 1,741 were completed and
1,419 are in
progress. Sometimes the houses were not allotted due to poor demand. Overall,
many assisted
projects have been successfully implemented. All the dwelling units are subject
to local
regulations and development rules. Lenders such as HDFC and other HFCs
generally ensure
conformity to such regulations before disbursements.
D. Operational Performance of the Borrowers
1. Organization, Management, and Staffing
24. NHB is managed by a board of directors comprising nominees from RBI;
central
Government (ministries of finance, urban development and poverty alleviation,
and rural
development); and state governments; and other professionals from finance,
architecture, and
housing sectors. NHB’s staff strength, including professionals equals 80
(Appendix 6, Table
A6.1). HUDCO is managed by a board of government nominees and government-
appointed
professionals (Appendix 6, Table A6.2). With a staff of 1,142, including 627
executives, HUDCO
has its corporate office in Delhi with 33 other offices. HDFC is a joint stock
company listed in the
stock exchanges and managed by a team of professionals under the supervision
of a board of
directors. The agency has a network of 118 offices and 1,029 employees,
including
professionals such as engineers, architects, lawyers, and financial specialists
(Appendix 6,
Table A6.3).
2. Personnel Administration
25. NHB staff include professionals from diverse disciplines such as economics,
finance,
law, civil engineering, urban/town planning, architecture, business
administration, chartered
accountancy, banking, computers, and information technology. NHB conducts
human resource
development programs regularly to upgrade staff skills to meet market needs.
HUDCO develops
human resources through regular training programs. During FY2002, 470
employees were
nominated for staff development programs in India and abroad. HDFC, a
professionally wellmanaged organization with a pool of committed, qualified
staff from various disciplines, offers
market-related compensation for its staff. HDFC revises its human resource
development
policies and compensation package periodically to meet market needs and staff
aspirations.
3. Lending Operations
26. NHB regulates, promotes, and financially helps the housing finance industry.
NHB’s
lending programs include refinance of individual housing loans (in urban and
rural areas,
through HFIs and HFCs), project loans, rental housing schemes, slum upgrading,
and offsite/on-site infrastructure development. NHB routes its financial
assistance through a wide
range of intermediary retail institutions such as HFCs, scheduled banks,
cooperative banks,
regional rural banks, agriculture and rural development banks, apex cooperative
housing
finance societies, and CFIs. Thirty-one HFCs, with a network of more than 650
branches across
the country and accounting for over 95% of HFCs’ market share, are approved
for refinance by
NHB. In its appraisal of HFCs, NHB includes assessment of their conformity to
financial
parameters, prudential guidelines, track record of repayments,
10
etc. As of FY2002 NHB’s
cumulative refinance to HFCs, commercial banks, and cooperative finance
institutions

10
Maintenance of a minimum CAR of 12%, liquid assets at least at 10%,
minimum net owned funds of Rs100
million, and maximum net NPL of 5% are some of the parameters.7
amounted to Rs72.51 billion, with most (76%) going to HFCs (Appendix 7).
Although limited in
quantum (Rs1.97 billion as of FY2002), NHB directly finances land development
and shelter,
housing infrastructure, and slum redevelopment projects. NHB’s support for
mortgage
securitization has helped float five MBS issues, so far mobilizing Rs3.60 billion.
27. HUDCO’s cumulative approvals and disbursements up to FY2002 aggregated
Rs420.12
billion and Rs293.34 billion, respectively, covering 13.12 million dwelling units,
over 4.88 million
sanitation units, and 1,915 infrastructure schemes (Appendix 7). HUDCO’s
outstanding portfolio
consists predominantly of government-guaranteed loans to government
departments/agencies
(92%), with the balance to private sponsors/individuals. HUDCO assistance is for
urban/rural
housing, staff quarters, repairs/renewals, night shelters, private builders’
projects, NGO/CBO
schemes, and retail mortgages. Urban infrastructure finance is for land
acquisition and
development, sanitation, slum improvement, utility infrastructure, social
infrastructure, and
economic and commercial infrastructure.
28. Most of HDFC’s operations consist of retail mortgages. The agency has
devised a
variety of loan structures to suit varying needs. HDFC also lends to corporations
for their
employees’ housing credit needs although this is not a significant part of its
portfolio. HDFC’s
cumulative approvals and disbursements by FY2002 reached Rs401.36 billion
and Rs335.70
billion, respectively (Appendix 7). Though limited in quantum, HDFC also lends
through
CFIs/NGOs. HDFC has developed transparent procedures for loan processing,
with emphasis
on assessing creditworthiness and repaying capacity. Before disbursement,
HDFC ensures
conformity to local development regulations and rules.
4. Other Operations
29. Other NHB operations include: (i) regulating and supervising about 350 HFCs
– it issues
prudential norms relating to income recognition, asset classification, capital
adequacy, asset
liability management, etc., and (ii) promoting and developing the housing sector
by guiding
investment to it by interacting closely with the Government to articulate and
influence policy.
NHB’s promotional initiatives include TA to sector participants, development of
the MBS market,
etc. HUDCO’s developmental role comprises support for technology
dissemination in housing
construction; research and training in capacity building for agencies; consultancy
services for
housing, urban development and infrastructure, and so on. HUDCO’s Human
Settlement
Management Institute provides training, research, and consultancy. Besides
focused credit
delivery in housing finance, HDFC has undertaken a number of finance initiatives
through its
associate companies in infrastructure finance, credit rating, credit information
services,
consumer finance, commercial banking, property management, asset
management, trusteeship
services, and insurance.
E. Borrower’s Financial Performance
30. NHB, being primarily a refinance institution, has a small loan book. NHB’s
disbursements increased from Rs5.3 billion in FY1998 to Rs11 billion in FY2002.
Significantly,
the pace of growth in NHB’s operations has slackened from an annual growth of
45.3% in
FY1999 to 5.4% in FY2002, reflecting the decline of refinance as a support
mechanism in an
increasingly market-oriented industry. HDFC registered consistent growth in loan
approvals and
disbursals. With an annual average growth of 29.3% over the last 5 years,
HDFC’s approvals
increased from Rs32.5 billion in FY1998 to Rs90.4 billion in FY2002, resulting in
growth of
outstanding portfolio to Rs171.7 billion by FY2002. HUDCO’s operations, which
registered
consistent growth in loan approvals up to FY2000, fell significantly in FY2001 but
recovered
somewhat during FY2002 with an approval of Rs81 billion. This trend is also
reflected in
HUDCO’s disbursements, which grew only very modestly over the last three
years. HUDCO’s
loan book composition has changed recently, with the share of housing falling
from 60% to 39%, 8
and the share of urban infrastructure increasing. While HDFC has consistently
had a high
proportion of disbursement to approval (around 84% over the last five years),
this ratio has been
low for HUDCO and has fluctuated considerably year by year.
F. Financial Statements and Ratios
31. NHB’s assets steadily increased in FY1998–2001, indicating the industry’s
growth and
demand for refinance (Appendix 8), but growth slowed down in FY2002. In recent
years, interest
rates have become increasingly market determined, and institutional
infrastructure has been
expanding, unleashing competitive forces. In response, HFIs and banks resort to
refinance only
at the margin. Development of the MBS market has also reduced the importance
of NHB’s role
as a provider of finance. NHB’s borrowings have not exhibited any significant
trend, although
reliance on RBI support has been reduced, and that on multilateral sources and
priority sector
bonds has increased. NHB’s reserves have grown steadily with regular plough
back of profits,
which were consistent in FY1998–2001 but declined in FY2002, primarily due to
withdrawal of
NHB’s tax-exempt status. The return on average equity and average assets went
up until
FY2001 but declined in FY2002. NHB’s CAR of 20.2% for FY2002 was well above
the
regulatory minimum. NHB is regulated by RBI and follows its guidelines for
provisioning and
write off. NHB’s debt-equity ratio was 4.5, and NPL ratio 0 for FY2002. NHB’s
asset liability
management is in accordance with RBI norms and reflects adequate liquidity in
short-term
buckets.
32. HUDCO’s assets grew steadily in FY1999–2002, although more slowly than in
recent
years (Appendix 9). Growth has been funded by equity infusion from the
Government and
increased issue of bonds, which have been enjoying good credit rating due to
implied
government support. Recently, however, bonds have been downgraded due to
the strained
financial position of some of the state governments to which HUDCO is exposed.
During
FY1998–2002 HUDCO’s reserves also grew, although if arrears in provisioning
were reckoned,
growth would be lower. HUDCO’s profits increased during FY1998–2001 but
declined in
FY2002. With the backlog in loan loss provisions, the adjusted bottom line would
reflect losses.
HUDCO’s financial ratios reflect declining performance since FY2001. HUDCO’s
CAR at 9.49%
for FY2002 is below the regulatory minimum of 12%. Although governed by
prudential norms
laid down by NHB, HUDCO has not made adequate loan loss provisions. The
statutory auditors
and ADB review missions have observed that HUDCO does not receive
confirmation of
outstanding balances from most of its borrowers. The missions have also
observed that
HUDCO lends against government guarantees. HUDCO’s performance has been
affected by
delays/defaults in payment by some state agencies. Going by the inadequate
provisioning
disclosed in financial statements, HUDCO’s recovery performance has not been
satisfactory.
33. HDFC’s assets have grown robustly at an average annual rate of 21.66%,
reflecting the
growth in the mortgage loan market (Appendix 10). Notwithstanding the
pressures of
competition, HDFC’s profits have increased continuously, resulting in accretion to
its reserves,
which have grown at an average annual rate of 11.4%. Return on equity
recorded continuous
increases while maintaining a constant return on average assets. HDFC follows
the regulatory
norms laid down by NHB for provisioning and write off. HDFC’s recovery has
been consistently
healthy, with an NPL ratio of about 1%. The debt-equity ratio, which increased
from 5.00 in
FY1999 to 6.69 in FY2002, was within healthy limits. HDFC’s book value and
earnings per
share have been consistently healthy. CAR has been above the minimum
required 12.0%
(14.5% in FY2002).
G. Covenants
34. All the three Borrowers have generally complied with most loan covenants
(Appendix
11). Some of the measures under institutional action plans were not fully
complied. In particular,9
these agencies did not take effective and sufficient steps to improve cooperative
financial
institutions. HUDCO and NHB did not submit audited statements to evidence
compliance with
some of the financial ratios. HUDCO has not complied with the required debt
service coverage
ratio for some of the years. None of the borrowers submitted benefit monitoring
and evaluation
reports or maintained separate records on bulk loans through intermediaries
funded out of ADB.
While the borrowers provided ADB with certified copies of the audited accounts
and financial
statements, auditors’ reports relating to loan utilization and compliance with
covenants were
irregular and provided only after reminders from ADB officials.
H. Performance of the Asian Development Bank
35. The Project was the first ADB intervention in the Indian housing finance
sector. The
Project’s efficient administration was somewhat affected by the steep learning
curve with
respect to institutional delivery system, intermediaries’ procedures and
practices and ADB loan
requirements. ADB allowed flexibility in reaching targeted beneficiaries through
alternate
delivery channels. Initial review missions were restricted due to administration in
headquarters
but were facilitated once the loan was delegated to the India Resident Mission.
The audit by the
ADB team showed how a few subloans were ineligible. Dispensing with prior ADB
subloan
review proved counterproductive as resources later had to be deployed to
replace ineligible
subloans. Closer ADB involvement before full disbursement would have allowed
better
utilization of assistance to targeted beneficiaries and improved recording of
program benefits.
ADB, however, enhanced its subsequent due diligence with more field and SOE
reviews.
III. EVALUATION
A. Loan Appraisal
1. Distribution of Subloans
36. Under part A of the Project, actual funds deployed and the number of
beneficiaries
broadly met project estimate. The targeted share of funds deployed for low-
income housing
was exceeded by a wide margin, and the share of low-income beneficiaries was
higher than
project estimates. Under the various subcomponents, the Borrowers’
performance met project
expectations, except in case of CFI/NGO lending channel estimates. Various
ground-level
realities pose problems for lending to the CFI/NGO sector, which the ADB Review
Mission
listed: (i) lack of adequate collateral, (ii) CFIs’/NGOs’ lack of knowledge of
financial operations,
(iii) rigid appraisal systems with emphasis on security rather than the servicing
capacity of the
borrower, and (iv) lack of imagination in devising flexible but commercially viable
loan
structures. NGOs/CFIs are also seen as being high-risk borrowers because of the
discontinuous
and uncertain income streams of the ultimate beneficiaries.
37. Under part B, slum improvement and low income housing projects projects
were to be
carried out under three kinds: (i) slum networking, (ii) workshed-cum-shelter, and
(iii) enhanced
productivity-cum-shelter. Innovation in slum networking subprojects were also
expected to
rectify drawbacks of the traditional approach, which did not involve beneficiary
consultation in
planning and implementation, and suffered from lack of ownership, since the
assistance was
considered free and the beneficiary not assured tenure. The assumption that the
Project would
be able to reach the poor through slum networking proved unrealistic. Even
HUDCO, which is
mandated to take up programs to meet the housing needs of low-income groups
and
economically weak sectors, could not meet project estimates. For the
commercially oriented
HDFC, slum networking and assistance through NGOs/CFIs posed too many risks.
NHB’s
scheme for lending to CFIs/NGOs through HFCs, although conceived long ago,
has not elicited
any response from them, which, like HDFC, lend on commercial principles. 10
38. Another possible reason behind underachievement in this area is the
prevalence of
several government housing schemes for the poor funded by budgetary
provisions. ADB’s
experience under another project,
11
which experimented with pilot projects to upgrade slums
through a similar participative process, indicates that slum communities and
even CFIs are
unwilling to borrow to develop community infrastructure but that demand for
loans for individual
connections rises once the infrastructure is in place. This Project also confirmed
review mission
findings that collateral requirements, bureaucratic procedures, absence of land
tenure, etc. are
the stumbling blocks to procuring institutional funds to upgrade slums. Despite
the inefficiency of
government-sponsored rural housing schemes, their very availability
discourages the demand
for credit-linked schemes. HUDCO, however, has lent for slum improvement
projects and lowincome housing through loans to slum development boards.
Although it did not use the ADB
loan to lend to CFIs/NGOs, HDFC has been lending to them under its KfW line of
credit, which
carry lower rates of interest than ADB’s loan. Under three KfW lines of credit,
HDFC financed
over 90,000 dwelling units with loans totaling Rs1 billion until FY2002. HDFC
finds that high cost
of ADB funds and lack of adequate collateral restrict lending to slum
improvement projects.
39. The borrowers have attempted to improve housing delivery, expand
housing finance
system, and increase the availability of housing finance by leveraging public and
private sector
capital. Since 1997 NHB registered six more HFCs as eligible for refinance.
NHB’s equity
investment in HFCs aggregated Rs151 million by FY2000. Housing finance
growth is reflected
in NHB’s refinance assistance and MBS floated in recent years. NHB has issued a
number of
MBS and also promoted a mortgage credit guarantee company for which ADB
has approved
equity assistance. All the borrowers have reached out to low-income groups.
40. Since 1997 the Government has initiated many legislative and policy reform
measures,
which are expected to encourage private sector investment in housing. The
repeal of the Urban
Land Ceiling Act, amendment of the Rent Control Act, and amendment of the
NHB Act to
facilitate foreclosure on defaulting loans and to lower stamp duties in some
states are examples
of such measures, although regulatory/legal reforms at the provincial level need
further action.
Training and outreach programs by HUDCO and NHB to build capacity in the
cooperative
housing sector and HFIs have not been sufficient in significantly improving their
performance.
2. Covenants
41. While the borrowers complied with most covenants, some of the project
expectations
were not reflected in the loan agreements, thus limiting ownership of achieving
such
expectations. The Project would have achieved higher leverage with a covenant
stipulating
higher share of borrowers in the project cost. ADB should conduct an outreach
program to
explain to the borrowers, ADB’s benefit monitoring and evaluation requirements.
3. Quality of Appraisal
42. NHB and HDFC follow stringent appraisal methods and on-lend only after
ascertaining
the beneficiaries’ creditworthiness. NHB has listed eligibility criteria and
prudential norms that
HFCs must fulfill if they want refinance (footnote 10). HDFC also strictly
ascertains beneficiaries’
eligibility. HUDCO has a standard and well-established set of guidelines for loan
appraisal.
While these procedures are followed for technical evaluation, ADB review
missions have
observed that certain other guidelines are sometimes not observed. To meet
government
targets for providing housing to the poor, HUDCO has relied on implied/overt
guarantee of state
governments without strict financial appraisal. Although HUDCO had a system of
internally
rating the intermediary institutions, the rating often did not reflect the current
financial position of

11
ADB. 1999. Technical Assistance to India for Strengthening Microfinance
Institutions for Urban Infrastructure
Finance. 11
the institutions due to backlog in finalization of accounts, and audit. Appraisal
and monitoring
procedures of loans through NGOs/nongovernment CFIs were based on
professional
assessment of the borrowing organization’s capacity and implementation
progress, perhaps
because they were not supply driven or supported by government guarantee.
43. ADB adequately assessed the economic situation and housing finance sector.
ADB’s
assessment of the roles of DFIs and their ability to channel project funds was
generally
satisfactory. However, monitoring procedures of executing agencies, particularly
HUDCO,
should be assessed more in-depth.
B. Implementation
44. ADB disbursed the loan amount quickly, within the first three years of
implementation
under the imprest account procedure and SOE procedure for liquidation and
replenishment. To
hedge the foreign exchange risks of ADB funds, all three borrowers entered into
specific
transactions with financial sector participants such as commercial banks and the
Export-Import
Bank of India. These transactions involved deposit of foreign currency funds
under the Project
with the counterparts against rupee loans/ subscription to rupee bonds by these
counterparts at
market-determined rates of interest. Debt servicing under such bilateral deals
coincided exactly
with interest payment dues and amortization schedules under the ADB loan.
45. The SOE threshold, which was too high for a typical housing loan, deterred a
closer
review in the early stages, leading to quick approval of most loans without the
required
screening. The SOE format should be modified to capture information for a better
review of
subloans and their benefits. ADB’s procedures and objectives should be known
early on in a
project, and project quality improved at entry to avoid problems of the kind
experienced when
ineligible subloans had to be substituted with eligible ones. The subborrowers
were sometimes
found to be late in on-lending to the ultimate beneficiaries. Although most of the
projects were
implemented, a more intensive screening early on could have prevented the
interruptions to
smooth project implementation.
IV. ASSESSMENT AND RECOMMENDATIONS
A. Relevance
46. Expansion of mortgage credit and institutional infrastructure for housing
finance
continues to be a priority. The Project, designed to channel ADB resources
through the three
national institutions, was appropriate for extending resources to low-income
housing. The
Housing Finance II Project, which was approved subsequently to purvey credit to
low-income
housing, is now under implementation, thus confirming the relevance of the
Project. The
experience points to the need to channel funds through a demand-induced
mechanism rather
than support supply-driven or government-sponsored measures, which do not
encourage cost
recovery.
47. The Project is relevant to the Government’s objective to improve slums.
However,
integration of CFIs/NGOs into mainstream financial institutions has not been
successful. While
NGOs/CFIs can motivate beneficiary participation, a number of changes have to
precede
mainstreaming of CFI/NGO efforts: (i) simplifying lending procedures, (ii) relaxing
collateral
requirements, (iii) building capacity of CFIs/NGOs and major HFIs, and (iv)
ensuring land
tenure. While able to articulate the need of the poor for housing finance,
NGOs/CFIs have not
made financial proposals sufficiently bankable. Besides, government
subsidized/free schemes 12
deter a commercial approach to mortgage credit. CFIs/NGOs, therefore, cannot
yet take the
place of government agencies in slum improvement and low-cost housing.
12
B. Efficacy in Achievement of Purpose
48. The Project was reasonably successful in improving access to housing
finance by the
poor, to whom 62% of ADB funds, against the target of 50%, were channeled.
Slum-upgradation
subprojects were undertaken through traditional government channels and did
not meet project
expectations of an innovative participative approach involving nongovernment
CFIs/NGOs . The
Project was also unsuccessful in integrating informal channels into the
mainstream financial
system.
49. The Project provided finance to more than 219,449 households and 191,700
LIHs. As
lending through the cooperative finance system was concentrated mainly in a
few states, the
Project achieved limited success in expanding the national cooperative system.
With the
changing financial architecture and move away from directed to commercial
lending, financial
institutions are expected to develop new equations and relationships with the
various
participants/stakeholders and informal players such as CFIs. Microfinance
institutions are
expected to have their own niche, and their role is expected to evolve, if slowly.
C. Efficiency in Achievement of Outputs and Purpose
50. The Project helped create close to the envisaged number of dwelling units,
resulting in
significant leveraging of funds from the beneficiaries. Various ADB initiatives
(para. 7) to
develop alternative sustainable sources of funds, together with this Project and
the Housing
Finance II Project, have helped expand the mortgage market and introduce MBS.
ADB has
catalyzed reforms to create quality mortgages and increase the supply of
dwelling units.
D. Preliminary Assessment of Sustainability
51. The Project adopted multiple channels to expand the housing finance sector.
The loan to
NHB was channeled through HFCs and the cooperative system. HFCs are
commercially
oriented organizations regulated by NHB and have adequately recovered the
cost of their
mortgages. The cooperative finance system, however, is weak in recovery and
has poor
accounting practices, with considerable backlog in accounts finalization and
audit. One
important development during recent years is the increasing role of commercial
banks in
mortgage finance. Another is the slow change in NHB’s refinance composition,
with increasing
assistance to commercial banks and HFCs rather than cooperative organizations.
NHB has
been redefining modes of credit expansion by playing a greater role in MBS
issues as an
advisor and investor. Adapting to market changes will make NHB sustainable in
the medium
term.
52. HUDCO has been the principal channel to support government-sponsored
programs.
Government-sponsored schemes, particularly for the poor, suffer from
inadequate cost recovery
and are administered through the cooperative finance system or state
government outfits/local
authority. Such schemes are target driven, and the agencies traditionally have
not been lending
commercially. As long as state government finances are healthy and budgetary
provisions
adequate to meet costs, these programs can be sustainable. With economic
reforms and recent
financial sector liberalization, state governments are moving gradually to contain
their fiscal
deficit, limiting their ability to guarantee state-sponsored programs. In FY2000
HUDCO started
to change its loan asset portfolio by opening a retail-lending window, and is now
limiting its

12
ADB. 1999. TA 3344-IND, which include pilot projects based on slum-
networking design supports this
conclusion. 13
exposure to states that can provide guarantees. While these initiatives appear to
be a response
to the environment, HUDCO’s financial operations have been affected by the
agency’s bias for
government-sponsored schemes, which are not sustainable in the long run due
to poor cost
recovery.
53. HDFC has operated commercially and adopted a professional approach to
appraisal and
monitoring of credit proposals. Programs channeling funds through HDFC, with
its
predominantly retail portfolio and excellent recovery ratio, are sustainable.
54. Programs with clear cost recovery mechanisms are sustainable. Wherever
equity
considerations compel policymakers choose subsidy, they should adopt a
professional
approach to cost recovery, with a transparent mechanism to channel subsidies.
The Project is
sustainable.
E. Other Impacts
55. Under its loans to private enterprises, HDFC funded subprojects to build
quarters for
low-income employees, which improved their and their families’ living, social,
and cultural
conditions—a state that will continue even after the employees retire. After
these employees
leave the company, their dwelling units will be allotted to new employees, who
will also similarly
benefit.
F. Overall Assessment
56. The Project’s main objective was to provide shelter to about 360,000
households, by
expanding and strengthening the delivery mechanism, improving linkages
between CFIs/NGOs
and HFIs, drawing up enabling policy reform, and ameliorating slum conditions
through
innovative projects for slum improvement and low-income housing. By providing
public and
private borrowers with diverse delivery channels and approaches to lending, the
Project
explored various methods to achieve the objective. The Project met its objectives
although its
sustainability was limited by the subborrowers’ inadequacies in professional
financial
management and accountability, and by the adverse demonstration effect that
state-sponsored
schemes had in cost recovery. Sector policy reform has been substantially
achieved with the
repeal of the Urban Land Ceiling Act, amendment of the Rent Control Act, and
amendment of
the NHB Act to facilitate foreclosure on defaulting loans, although more state
regulatory/legal
reforms are needed. The Project achieved limited success in expanding the
cooperative finance
system with insufficient proactive efforts to expand assistance to hitherto less-
served states.
The Project was unsuccessful in establishing linkages between CFI/NGO and HFIs.
Overall the
Project was successful.
G. Lessons Learned
57. Formal agencies hesitate to lend to CFIs/NGOs, which are seen as high-risk
borrowers
due to the discontinuous and uncertain income streams of the ultimate
beneficiaries, lack of
security, incapacity of the intermediary, etc. The perceived risk compelled HFIs
to be selective
in lending through this window. HDFC for instance, has reported 100% recovery
in assistance to
CFIs/NGOs, but not out of the project funds, suggesting that to meet the large
gap in housing
for the poor, specialized HFIs with a social mandate, such as HUDCO, are still
relevant.
However, to sustain such institutions, a transparent mechanism is needed to
meet the social
costs of such intermediation, and processes and procedures of field-level
institutions such as
the cooperative societies need to be changed fundamentally. Linkages between
CFIs/NGOs
and HFIs for slum networking can be realized only after some of the macro issues
relating to
state policies on land title, cost recovery, transparency of subsidies, improved
governance, and
reform of state agencies’ financial management are solved. Other important
lessons include the
following: (i) a different set of guidelines must be adopted to assess and mitigate
risks under 14
CFI/NGO, (ii) high intermediation costs should be recognized, and (iii)
intermediaries’ capacity
must be upgraded. To maximize the chances of project success, particularly in
policy reform
and institutional development, the borrowers’ roles need to be clearly laid out
and agreed upon
formally. To facilitate monitoring and timely response, executing agencies must
understand
early on ADB’s procedures and feedback requirements. The usually stipulated
free and SOE
limits are often irrelevant in these kinds of projects where the subloans
constitute individual
mortgage loans, which are too small ($1,000–10,000) to be above the limits. A
format should be
devised to capture data during disbursement to better monitor subprojects and
facilitate
subsequent reviews on a random basis.
58. The Project would have achieved a higher leverage had the borrowers
shouldered a
higher share of the project cost. The prevalence of subsidized government-
sponsored schemes
discourages cost recovery even from those willing and able to repay. Field
reviews of some lowincome group schemes revealed many instances of higher
investment than estimated by the
borrowers, funded by informal sources such as savings, moneylenders, etc. While
many such
beneficiaries regularly serviced such informal loans, often at usurious rates of
interest,
repayments to government intermediaries were irregular.
H. Recommendations
59. The Government’s policy of increased private sector participation and
limiting the
Government’s role to creating a conducive environment is appropriate and
worthy of continued
support. The commercially oriented institutional structure consisting of HFCs and
commercial
banks provides channels of purveying credit to middle- and high-income
borrowers, and
perhaps even to some at the upper end of the low-income category. The
cooperative system
should be restructured and profefsssionalized to improve financial management,
record
maintenance, and accountability since the system can better reach rural areas,
economically
weak sectors, and the poor than HFCs and commercial banks. Subsidy may be
necessary for
the poorer sections, and should be transmitted in a transparent manner through
all institutional
channels to promote competition and encourage alternate methods of leveraging
the subsidy for
larger benefit.
60. Resources should be allocated for continuous monitoring of ADB lending
program
benefits, and mechanisms established to identify the roles of various project
stakeholders. To
achieve institutional/policy objectives, borrowers’ roles should be clearly laid out
and agreed
upon formally. Future projects must ensure that the executing agencies
comprehend well and
early on ADB’s procedures and feedback requirements. The threshold limits for
free and SOE
limits and documentation requirements should be relevant to the Project and
should be
restructured to meet ADB’s feedback needs. Component
Estimate
AchieveEstimate ment
AchieveEstimate ment
AchieveEstimate ment
Achievement
Part A: Lending for Housing to CommunityBased Finance Institutions, Housing
Finance
Institutions, Companies, and Households
Lending through Government Cooperatives 40.00 43.56 25.00 35.28 10.00 12.76
75.00 91.60
20.00 1.68 0.00 Lending through NGOs and CFIs 5.00 0.00 5.00 1.68 10.00
55.00 56.44 45.00 56.24 65.00 87.24 165.00 199.92 Lending through
0.00 0.00 0.00 0.00 0.00 32.75 0.00 32.75 - Companies
0.00 0.00 0.00 56.24 0.00 16.77 0.00 73.01 - Corporations and Municipalities
55.00 56.44 0.00 0.00 0.00 0.00 0.00 56.44 - HFCs
0.00 0.00 0.00 0.00 0.00 37.72 0.00 37.72 - Directly to Households
293.20 100.00 260.00 85.00 93.20 75.00 100.00 100.00 ) Subtotal
(Part A
Part B: Lending for Slum Improvement and Low-
6.80 0.00 40.00 0.00 15.00 0.00 0.00 25.00 Income Housing
Subprojects
0.00 0.00 Slum Improvement, of which :
0.00 0.00 0.00 0.00 0.00 6.78 0.00 0.00 - Slum Networking
0.00 0.00 0.00 0.00 0.00 0.02 0.00 0.00 - Workshed-cum-Shelter
- Enhanced Productivity-cum-Shelter 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
6.80 15.00 0.00 40.00 6.80 Subtotal (Part B) 0.00 0.00 25.00
Part C: Expanding the National Housing Finance
System
300.00 300.00 100.00 100.00 100.00 Total 100.00
lopment Corporation Ltd. CFI = Community-Based Finance Institutions, HDFC =
Housing Development Finance Corporation Ltd., HUDCO = Housing and Urban
Deve
LOAN UTILIZATION
($ million)
To be carried out by NHB from its own resouces
Total HDFC HUDCO NHB
Table A1.1: Estimates and Achievements
Appendix 1 15 Assistance for LIG Units Assistance for Non-LIG Units
Total Assistance Share of LIG Units
DFI Number Amount Number Amount Number Amount
Number of
Funds DUs
% (Rs million) ($ million) (Rs million) ($ million) (Rs million) ($ million) %
53.8 67.1 100.0 4,260.5 1,969.0 46.2
46,665 53.8 15,358 2,291.48 NHB 31,307
73.9 95.9 100.0 4,226.6 1,103.6 26.1
140,762 73.9 5,835 3,123.02 HUDCO 134,927
58.5 79.5 100.0 4,253.9 1,764.3 41.5
32,022 58.5 6,556 2,489.59 HDFC 25,466
62.0 87.4 300.0 12,741.0 4,836.9 113.8
219,449 186.2 27,749 7,904.09 Total 191,700
using and Urban Development Corporation Limited, DU = dwelling units, DFI =
development finance institutions, HDFC = Housing Development Finance
Corporation Limited, HUDCO = Ho
LIG = lower income group, NHB = National Housing Bank.
Source: Borrowers' reports.
Table A1.2: Share of LIG in Total Assistance
LOAN UTILIZATION
16 Appendix 1 State NHB HUDCO HDFC Total NHB HUDCO HDFC
Total Share
(%)
Andaman & Nicobar 6.30 6.30 0.15 0.15 0.06
Andhra Pradesh 626.58 294.40 920.98 14.82 6.92 21.75 9.19
Assam 70.08 70.08 1.66 0.00 1.66 0.70
Bihar 50.56 50.56 1.20 0.00 1.20 0.50
Gujarat 642.54 329.08 971.62 15.20 7.74 22.94 9.70
Haryana 95.75 95.75 2.27 0.00 2.27 0.96
Himachal Pradesh 7.23 7.23 0.17 0.00 0.17 0.07
Jammu & Kashmir 13.31 13.31 0.32 0.00 0.32 0.13
Karnataka 58.89 52.72 338.70 450.31 1.38 1.25 7.96 10.59 4.49
Kerala 1,037.55 1,401.51 47.50 2,486.56 24.35 33.16 1.12 58.63 24.82
Madhya Pradesh 74.75 246.20 320.95 0.00 1.77 5.79 7.56 3.20
Maharashtra 170.62 927.14 1,097.76 0.00 4.04 21.79 25.83 10.96
Manipur 0.74 0.74 0.00 0.02 0.00 0.02 0.01
Rajasthan 81.40 332.87 414.27 0.00 1.93 7.83 9.75 4.13
Tamil Nadu 771.79 885.17 1,402.07 3,059.03 18.12 20.94 32.96 72.02 30.53
West Bengal 7.07 47.32 54.39 0.17 1.12 0.00 1.29 0.54
Total 1,875.30 4,226.58 3,917.96 10,019.84 44.02 100.00 92.10 236.12 100.00
NHB = National Housing Bank, HUDCO = Housing and Urban Development
Corporation Limited, HDFC = Housing Development Finance
Corporation Limited.
Notes: (i) Tamil Nadu, Kerala, Maharashtra, Gujarat, and Andhra Pradesh account
for 85.19% of total disbursements.
(ii) For HDFC, the figures are for state cooperatives, state government
corporations, private sector, and
major individual loans, accounting for 92.1% of the total funds disbursed.
(iii) For NHB, data cover assistance to the Government. In case of HFC
assistance, state data are not available.
(iv) $236.118 million is 78.7% of the total disbursement of $300 million
Source: Borrower's progress reports.
Table A1.3: Disbursement of Loans by NHB, HUDCO and HDFC by State
(Rs million) ($ million)
LOAN UTILIZATION
Major Recipients of ADB-HF1 Loan
30.53
24.82
10.96
9.70 9.19
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Tamilnadu Kerala Maharashtra Gujarat Andhra Pradesh
State
%
Appendix 1 17 18 Appendix 1
Loan No. 1549-IND to NHB
(Cooperative schemes only)
Loan No. 1550-IND to HUDCO
Loan No. 1551-IND to HDFC
(for state cooperatives, state governments, corporations, state governments,
and
private sector, accounting for 62.4% of the total funds disbursed)
Source: Borrowers' progress reports.
Table A1.4: Disbursement of Loans by State
LOAN UTILIZATION
Major Recipient States of Loan 1549
3.14
55.33
41.16
0.00
10.00
20.00
30.00
40.00
50.00
60.00
Karnataka Kerala Tamil Nadu
State
%
Major Recipients of Loan 1550
20.94
14.82 15.20
33.16
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Andhra Pradesh Gujarat Kerala Tamil Nadu
State
%
Major Recipients of Loan 1551
12.75
9.27
12.54
46.10
0.00
10.00
20.00
30.00
40.00
50.00
Karnataka Madhya Pradesh Rajasthan Tamil Nadu
State
%Serial Name of the Subborrower Rs million
$ million
Equivalent Component
1 AB Homes 3.300 0.083 Housing finance institutions
2 BOB Housing 5.413 0.135 Housing finance institutions
3 AB Homes 1.960 0.049 Housing finance institutions
4 AB Homes 2.839 0.071 Housing finance institutions
5 Housing Development Finance Corporation 6.965 0.174 Housing finance
institutions
6 Housing Development Finance Corporation 100.155 2.504 Housing finance
institutions
7 AB Homes 1.860 0.047 Housing finance institutions
8 Cent Bank Homes 1.860 0.047 Housing finance institutions
9 Karnataka Agricultural & Rural Development Board 57.400 1.435 Cooperative
schemes
10 AB Homes 2.470 0.062 Housing finance institutions
11 Global 0.880 0.022 Housing finance institutions
12 Karnataka Agricultural & Rural Development Board 1.490 0.037
Cooperative schemes
13 Vysya Bank HFI 16.600 0.415 Housing finance institutions
14 West Bengal Agricultural & Rural Development Board 7.070 0.177
Cooperative schemes
15 AB Homes 2.260 0.057 Housing finance institutions
16 BOB Housing 50.040 1.251 Housing finance institutions
17 Housing Development Finance Corporation 17.366 0.434 Housing finance
institutions
18 AB Homes 75.330 1.883 Housing finance institutions
19 BOB Housing 41.250 1.031 Housing finance institutions
20 LIC Housing 8.173 0.204 Housing finance institutions
21 Can Fin Homes 17.000 0.425 Housing finance institutions
22 BOB Housing 12.730 0.318 Housing finance institutions
23 Hometrust 115.540 2.889 Housing finance institutions
24 Vijaya Bank Housing 23.170 0.579 Housing finance institutions
25 Hometrust 14.102 0.353 Housing finance institutions
26 Housing Development Finance Corporation 49.937 1.248 Housing finance
institutions
27 Kerala Agricultural and Rural Development Bank 192.824 4.723 Cooperative
schemes
28 Gujarat Lease Financing Ltd. 77.39 1.833 Housing finance institutions
29 Tamil Nadu Apex Cooperative 124.370 2.946 Cooperative schemes
30 LIC Housing 28.293 0.670 Housing finance institutions
31 Dewan Homes 15.680 0.371 Housing finance institutions
32 BOB Housing 5.555 0.132 Housing finance institutions
33 Vijaya Bank Housing 0.428 0.010 Housing finance institutions
34 Kerala Agricultural and Rural Development Bank 278.576 6.600 Cooperative
schemes
35 Dewan Homes 2.940 0.070 Housing finance institutions
36 BOB Housing 7.045 0.167 Housing finance institutions
37 Global 3.068 0.073 Housing finance institutions
38 Cent Bank Homes 10.592 0.251 Housing finance institutions
39 Vijaya Bank Housing 0.180 0.004 Housing finance institutions
40 PNB Housing 38.240 0.906 Housing finance institutions
41 AB Homes 17.668 0.419 Housing finance institutions
42 Gujarat Lease Financing Ltd. 22.291 0.528 Housing finance institutions
43 BOB Housing 4.465 0.106 Housing finance institutions
Table A2.1: Loan No. 1549-IND: Housing Finance Project – NHB
(details of subloans)
Appendix 2 19Serial Name of the Subborrower Rs million
$ million
Equivalent Component
44 Vijaya Bank Housing 0.160 0.004 Housing finance institutions
45 Dewan Homes 56.993 1.350 Housing finance institutions
46 Gruh 33.948 0.804 Housing finance institutions
47 Hometrust 10.230 0.242 Housing finance institutions
48 Housing and Urban Development Corporation 153.600 3.639 Housing finance
institutions
49 AB Homes 12.400 0.294 Housing finance institutions
50 Can Fin Homes 17.599 0.417 Housing finance institutions
51 BOB Housing 7.006 0.166 Housing finance institutions
52 Tamil Nadu Apex Cooperative 79.667 1.887 Cooperative schemes
53 Kerala Agricultural and Rural Development Bank 270.489 6.347 Cooperative
schemes
54 AB Homes 8.647 0.199 Housing finance institutions
55 BOB Housing 14.684 0.338 Housing finance institutions
56 BOB Housing 11.841 0.272 Housing finance institutions
57 BOB Housing 8.981 0.206 Housing finance institutions
58 Can Fin Homes 4.396 0.101 Housing finance institutions
59 Can Fin Homes 118.350 2.721 Housing finance institutions
60 Dewan Homes 115.080 2.646 Housing finance institutions
61 Gujarat Lease Financing Ltd. 6.625 0.152 Housing finance institutions
62 Gujarat Lease Financing Ltd. 6.917 0.159 Housing finance institutions
63 Gujarat Lease Financing Ltd. 10.663 0.245 Housing finance institutions
64 Gruh 27.977 0.643 Housing finance institutions
65 Hometrust 1.255 0.029 Housing finance institutions
66 Hometrust 7.501 0.172 Housing finance institutions
67 Housing and Urban Development Corporation - KSHB 210.000 4.828 Housing
finance institutions
68 Kerala Agricultural and Rural Development Bank 184.980 4.252 Cooperative
schemes
69 Kerala Agricultural and Rural Development Bank 30.950 0.711 Cooperative
schemes
70 Kerala Agricultural and Rural Development Bank 78.780 1.811 Cooperative
schemes
71 Kerala Agricultural and Rural Development Bank 0.953 0.022 Cooperative
schemes
72 LIC Housing 94.508 2.173 Housing finance institutions
73 PNB Housing 54.860 1.261 Housing finance institutions
74 PNB Housing 79.390 1.825 Housing finance institutions
75 PNB Housing 84.880 1.951 Housing finance institutions
76 PNB Housing 98.930 2.274 Housing finance institutions
77 PNB Housing 107.340 2.468 Housing finance institutions
78 PNB Housing 211.430 4.860 Housing finance institutions
79 Tamil Nadu Apex Cooperative 124.367 2.859 Cooperative schemes
80 Tamil Nadu Apex Cooperative 143.862 3.307 Cooperative schemes
81 Tamil Nadu Apex Cooperative 3.552 0.082 Cooperative schemes
82 Tamil Nadu Apex Cooperative 295.966 6.804 Cooperative schemes
83 Vijaya Bank Housing 0.155 0.004 Housing finance institutions
84 Vijaya Bank Housing 1.233 0.028 Housing finance institutions
85 Vijaya Bank Housing 1.280 0.029 Housing finance institutions
86 Vijaya Bank Housing 1.270 0.029 Housing finance institutions
Total 4,260.46 100.35
Average rate of exchange: Rs42.605 = $1
Source: National Housing Bank.
20 Appendix 2 Appendix 2 21
Serial Subborrower State Rs million
$ Million
Equivalent Component
1 State Andaman & Nicobar
Andaman &
Nicobar
6.30 0.15 Housing board and local bodies
2 Andhra Pradesh Housing Board Andhra Pradesh 3.68 0.09 Housing board and
local bodies
3 Andhra Pradesh Housing Board Andhra Pradesh 5.68 0.13 Housing board and
local bodies
4 Andhra Pradesh Housing Board Andhra Pradesh 8.81 0.21 Housing board and
local bodies
5 SHARE, Hyderabad Andhra Pradesh 0.80 0.02 Nongovernment organizations
6 Andhra Pradesh Housing Board Andhra Pradesh 10.69 0.25 Housing board and
local bodies
7 TWACHARDO Andhra Pradesh 0.20 0.00 Nongovernment organizations
8 APSHC - East Godavari Andhra Pradesh 30.00 0.71 Housing board and local
bodies
9 APSHC - Vizianagram Andhra Pradesh 30.00 0.71 Housing board and local
bodies
10 APSHC - Godavari (GII) Andhra Pradesh 30.00 0.71 Housing board and local
bodies
11 APSHC - Godavari (GI) Andhra Pradesh 30.00 0.71 Housing board and local
bodies
12 APSHC - East & West Godavari Andhra Pradesh 25.01 0.59 Housing board and
local bodies
13 APSHC - Karnool, Annanthpur Andhra Pradesh 20.43 0.48 Housing board and
local bodies
14 APSHC - Guntur Andhra Pradesh 30.00 0.71 Housing board and local bodies
15 APSHC - Prakasam Andhra Pradesh 27.00 0.64 Housing board and local bodies
16 APSHC - Chitoor Andhra Pradesh 30.00 0.71 Housing board and local bodies
17 APSHC - Nizamabad Andhra Pradesh 30.00 0.71 Housing board and local
bodies
18 APSHC - Chitoor Andhra Pradesh 30.00 0.71 Housing board and local bodies
19 APSHC - Cuddupah Andhra Pradesh 26.25 0.62 Housing board and local
bodies
20 APSHC - Nellore Andhra Pradesh 15.00 0.35 Housing board and local bodies
21 APSHC - Kurnool Andhra Pradesh 15.00 0.35 Housing board and local bodies
22 TWACHARDO Andhra Pradesh 0.20 0.00 Nongovernment organizations
23 APSHC - Pundar Andhra Pradesh 102.89 2.43 Housing board and local bodies
24 APSHC - AP Andhra Pradesh 125.00 2.96 Housing board and local bodies
25 Assam State Coop Housing Fed Assam 70.08 1.66 Cooperative schemes
26 BSCHFL Bihar 50.00 1.18 Cooperative schemes
27 SHAKTI Mahila Vikas Swalambi Samiti Bihar 0.56 0.01 Nongovernment
organizations
28 Sardar Sarovar Nigam Ltd. Gujarat 186.86 4.42 Housing board and local
bodies
29 Gujarat HB Gujarat 1.76 0.04 Housing board and local bodies
30 Gujarat HB Gujarat 1.71 0.04 Housing board and local bodies
31 Sardar Sarovar Nigam Ltd. Gujarat 390.61 9.24 Housing board and local
bodies
32 Gujarat HB Gujarat 22.37 0.53 Housing board and local bodies
33 SEWA Bank, Ahmedabad Gujarat 9.60 0.23 Nongovernment organizations
34 Surat Municipal Corporation Gujarat 8.90 0.21 Slum improvement
35 Surat Municipal Corporation Gujarat 8.93 0.21 Slum improvement
36 Gujarat HB Gujarat 0.90 0.02 Housing board and local bodies
37 Gujarat HB Gujarat 1.01 0.02 Housing board and local bodies
38 Gujarat HB Gujarat 9.90 0.23 Housing board and local bodies
39 Haryana HB Haryana 22.05 0.52 Housing board and local bodies
40 Haryana HB Haryana 16.81 0.40 Housing board and local bodies
41 Haryana HB Haryana 21.25 0.50 Housing board and local bodies
42 Haryana HB Haryana 17.88 0.42 Housing board and local bodies
43 Haryana HB Haryana 5.45 0.13 Housing board and local bodies
44 Haryana HB Haryana 5.54 0.13 Housing board and local bodies
45 Haryana HB Haryana 3.37 0.08 Housing board and local bodies
46 Haryana HB Haryana 3.41 0.08 Housing board and local bodies
47 HPHB Himachal Pradesh 4.78 0.11 Housing board and local bodies
48 HPHB Himachal Pradesh 2.45 0.06 Housing board and local bodies
49 Jammu Kashmir Coop Housing Fed Jammu & Kashmir 6.26 0.15 Cooperative
schemes
50 Jammu Kashmir Coop Housing Fed Jammu & Kashmir 7.06 0.17 Cooperative
schemes
51 Karnataka Slum Clearance Board Karnataka 1.79 0.04 Slum improvement
Table A2.2: Loan No. 1550-IND: Housing Finance Project – HUDCO
(details of subloans)22 Appendix 2
Serial Subborrower State Rs million
$ Million
Equivalent Component
52 Karnataka Slum Clearance Board Karnataka 2.69 0.06 Slum improvement
53 Karnataka Slum Clearance Board Karnataka 3.11 0.07 Slum improvement
54 Karnataka Slum Clearance Board Karnataka 1.81 0.04 Slum improvement
55 Karnataka Slum Clearance Board Karnataka 2.95 0.07 Slum improvement
56 KHB Karnataka 40.37 0.96 Slum improvement
57 KSHB Kerala 21.42 0.51 Housing board and local bodies
58 KSHB Kerala 6.72 0.16 Housing board and local bodies
59 KSHB Kerala 24.60 0.58 Housing board and local bodies
60 KSHB Kerala 24.60 0.58 Housing board and local bodies
61 KSHB Kerala 24.60 0.58 Housing board and local bodies
62 KSHB Kerala 30.00 0.71 Housing board and local bodies
63 KSHB Kerala 30.00 0.71 Housing board and local bodies
64 KSHB Kerala 29.75 0.70 Housing board and local bodies
65 KSHB Kerala 29.75 0.70 Housing board and local bodies
66 KSHB Kerala 29.75 0.70 Housing board and local bodies
67 Housefed Kerala 70.74 1.67 Cooperative schemes
68 Santhigiri Ashram Kerala 0.73 0.02 Nongovernment organizations
69 SIDA, Kottapally Kerala 7.00 0.17 Nongovernment organizations
70 KSHB Kerala 15.93 0.38 Housing board and local bodies
71 KSHB Kerala 16.57 0.39 Nongovernment organizations
72 KSHB Kerala 15.00 0.35 Nongovernment organizations
73 Housefed Kerala 29.58 0.70 Cooperative schemes
74 Housefed Kerala 78.60 1.86 Housing board and local bodies
75 Housefed Kerala 80.01 1.89 Housing board and local bodies
76 Housefed Kerala 80.01 1.89 Cooperative schemes
77 KSHB Kerala 25.38 0.60 Housing board and local bodies
78 KSHB Kerala 6.95 0.16 Housing board and local bodies
79 KSHB Kerala 11.60 0.27 Housing board and local bodies
80 KSHB Kerala 11.60 0.27 Housing board and local bodies
81 KSHB Kerala 11.60 0.27 Housing board and local bodies
82 Housefed Kerala 26.08 0.62 Cooperative schemes
83 Housefed Kerala 30.00 0.71 Cooperative schemes
84 Housefed Kerala 170.00 4.02 Cooperative schemes
85 Vandanmedu Development Society Kerala 7.00 0.17 Nongovernment
organizations
86 Vandanmedu Development Society Kerala 1.20 0.03 Nongovernment
organizations
87 Vandanmedu Development Society Kerala 2.50 0.06 Nongovernment
organizations
88 SIDA Kerala 12.50 0.30 Nongovernment organizations
89 KSHB Kerala 19.76 0.47 Housing board and local bodies
90 Housefed Kerala 72.15 1.71 Cooperative schemes
91 Housefed Kerala 86.74 2.05 Cooperative schemes
92 Housefed Kerala 86.95 2.06 Cooperative schemes
93 KSHB Kerala 25.26 0.60 Housing board and local bodies
94 KSHB Kerala 25.26 0.60 Housing board and local bodies
95 KSHB Kerala 25.26 0.60 Housing board and local bodies
96 KSHB Kerala 25.26 0.60 Housing board and local bodies
97 KSHB Kerala 25.26 0.60 Housing board and local bodies
98 KSHB Kerala 25.26 0.60 Housing board and local bodies
99 COSTFORD Kerala 12.50 0.30 Nongovernment organizations
100 KSHB Kerala 25.26 0.60 Housing board and local bodies
101 KSHB Kerala 25.26 0.60 Housing board and local bodies
102 Special Area Development Authority Madhya Pradesh 2.43 0.06 Housing
board and local bodies
103 Jabalpur Development Authority Madhya Pradesh 14.70 0.35 Housing board
and local bodies
104 Special Area Development Authority Madhya Pradesh 8.89 0.21 Housing
board and local bodies
105 MRSPBM Madhya Pradesh 30.00 0.71 Cooperative schemes
106 MPHB Madhya Pradesh 15.40 0.36 Housing board and local bodies
107 MPHB Madhya Pradesh 3.33 0.08 Housing board and local bodiesAppendix 2
23
Serial Subborrower State Rs million
$ Million
Equivalent Component
108 SPARC-Suryodaya Coop Society Maharashtra 1.40 0.03 Nongovernment
organizations
109 NIT, Nagpur Maharashtra 43.85 1.04 Housing board and local bodies
110 JMC, Jalgaon Maharashtra 36.92 0.87 Slum improvement
111 JMC, Jalgaon Maharashtra 52.69 1.25 Slum improvement
112 JMC, Jalgaon Maharashtra 35.77 0.85 Slum improvement
113 CHIL CHIL Asian Mission Society Manipur 0.74 0.02 Nongovernment
organizations
114 Artisans Alliance Jawaja, Rajasthan Rajasthan 1.15 0.03 Nongovernment
organizations
115 Rajasthan HB Rajasthan 9.18 0.22 Housing board and local bodies
116 Rajasthan HB Rajasthan 19.20 0.45 Housing board and local bodies
117 Urban Improvement Trust, Ajmer Rajasthan 3.50 0.08 Housing board and
local bodies
118 Rajasthan HB Rajasthan 11.49 0.27 Housing board and local bodies
119 Rajasthan HB Rajasthan 25.69 0.61 Housing board and local bodies
120 Rajasthan HB Rajasthan 6.31 0.15 Housing board and local bodies
121 Rajasthan HB Rajasthan 4.88 0.12 Housing board and local bodies
122 TNCHF - Madurai, Mannar, Thirumalai Tamil Nadu 13.50 0.32 Cooperative
schemes
123 TNCHF - Madurai, Mannar, Thirumalai Tamil Nadu 15.68 0.37 Cooperative
schemes
124 TNCHF - Madurai, Mannar, Thirumalai Tamil Nadu 15.68 0.37 Cooperative
schemes
125 TNCHF - Mannar, Thirumalai, Rammd Tamil Nadu 30.34 0.72 Cooperative
schemes
126 Tamil Nadu Handloom Weavers Coop Society Tamil Nadu 0.84 0.02
Workshed cum housing
127 Tamil Nadu Slum Clearance Board Tamil Nadu 14.70 0.35 Slum
improvement
128 TNCHF - Arcot, Ramaswamy Tamil Nadu 1.55 0.04 Cooperative schemes
129 TNCHF - Theeran Tamil Nadu 1.79 0.04 Cooperative schemes
130 TNCHF - Mannar Tamil Nadu 3.00 0.07 Cooperative schemes
131 TNCHF - Coimbatore Tamil Nadu 3.00 0.07 Cooperative schemes
132 Tamil Nadu HB Tamil Nadu 12.70 0.30 Housing board and local bodies
133 TNCHF - Mannar Tamil Nadu 12.84 0.30 Cooperative schemes
134 TNCHF - Kamarajar Tamil Nadu 12.84 0.30 Cooperative schemes
135 TNCHF - Chidambarnar Tamil Nadu 12.16 0.29 Cooperative schemes
136 TNCHF - Coimbatore Tamil Nadu 8.66 0.20 Cooperative schemes
137 TNCHF - Ambedkar Tamil Nadu 12.84 0.30 Cooperative schemes
138 TNCHF - Dharampuri Tamil Nadu 12.84 0.30 Cooperative schemes
139 TNCHF - Rajaji Tamil Nadu 12.84 0.30 Cooperative schemes
140 Tamil Nadu Slum Clearance Board Tamil Nadu 17.71 0.42 Slum
improvement
141 Tamil Nadu Slum Clearance Board Tamil Nadu 9.32 0.22 Slum improvement
142 Tamil Nadu Slum Clearance Board Tamil Nadu 10.01 0.24 Slum
improvement
143 TNCHF - Thanjavar Tamil Nadu 12.82 0.30 Cooperative schemes
144 TNCHF - Theeran Tamil Nadu 12.82 0.30 Cooperative schemes
145 TNCHF - Pudukottai Tamil Nadu 12.82 0.30 Cooperative schemes
146 TNCHF - Madurai Tamil Nadu 12.89 0.30 Cooperative schemes
147 TNCHF - Mannar, Thirumalai Tamil Nadu 12.82 0.30 Cooperative schemes
148 TNCHF - Kamrajar Ph IV Tamil Nadu 8.06 0.19 Cooperative schemes
149 TNCHF - N. Arcot Ambedkar Tamil Nadu 10.62 0.25 Cooperative schemes
150 TNCHF - Periyar Tamil Nadu 11.94 0.28 Cooperative schemes
151 TNCHF - Thiruchi Tamil Nadu 2.29 0.05 Cooperative schemes
152 TNCHF - Tirunelveli Tamil Nadu 8.60 0.20 Cooperative schemes
153 Palmyrah Workers Dev. Society Tamil Nadu 3.00 0.07 Nongovernment
organizations
154 Tamil Nadu Slum Clearance Board Tamil Nadu 16.80 0.40 Slum
improvement
155 Tamil Nadu Slum Clearance Board Tamil Nadu 8.40 0.20 Slum improvement
156 Tamil Nadu Slum Clearance Board Tamil Nadu 36.31 0.86 Slum
improvement
157 TNCHF - Kamarajar Tamil Nadu 10.40 0.25 Cooperative schemes
158 TNCHF - Kanyakumari Tamil Nadu 3.08 0.07 Cooperative schemes
159 Tamil Nadu Slum Clearance Board Tamil Nadu 14.00 0.33 Slum
improvement
160 Tamil Nadu Slum Clearance Board Tamil Nadu 3.13 0.07 Slum improvement
162 CEDMA, Chennai Tamil Nadu 2.50 0.06 Nongovernment organizations
163 TNCHF - Ramanathapuram Tamil Nadu 11.55 0.27 Cooperative schemes
164 TNCHF - Madurai Tamil Nadu 14.63 0.35 Cooperative schemes24 Appendix 2
Serial Subborrower State Rs million
$ Million
Equivalent Component
165 TNCHF - Dingigual Anna Tamil Nadu 0.97 0.02 Cooperative schemes
166 TNCHF - Perambur Tamil Nadu 10.00 0.24 Cooperative schemes
167 TNCHF - Vellore Tamil Nadu 20.00 0.47 Cooperative schemes
168 TNCHF - Tirunelveli Tamil Nadu 26.00 0.62 Cooperative schemes
169 TNCHF - Dharmapuri Tamil Nadu 24.00 0.57 Cooperative schemes
170 TNCHF - Trichy Tamil Nadu 12.00 0.28 Cooperative schemes
171 TNCHF - Madurai Tamil Nadu 16.00 0.38 Cooperative schemes
172 TNCHF - Theni Tamil Nadu 14.00 0.33 Cooperative schemes
173 TNCHF - Erode Tamil Nadu 20.00 0.47 Cooperative schemes
174 TNCHF - Madurai & Theni Tamil Nadu 45.65 1.08 Cooperative schemes
175 TNCHF - Karur, Thiran, Chinnamalai Tamil Nadu 16.66 0.39 Cooperative
schemes
176 TNCHF - ESW Tamil Nadu 19.02 0.45 Cooperative schemes
177 TNCHF - MIG Tamil Nadu 22.83 0.54 Cooperative schemes
178 Tamil Nadu Slum Clearance Board Tamil Nadu 1.54 0.04 Slum improvement
179 TNCHF - Marginal Farmers Tamil Nadu 10.20 0.24 Cooperative schemes
180 Tamil Nadu HB Tamil Nadu 4.82 0.11 Housing board and local bodies
181 Community Action for Rural Development Tamil Nadu 0.41 0.01
Nongovernment organizations
182 TNCHF - Cuddalore, Viluparam Tamil Nadu 10.85 0.26 Cooperative schemes
183 TNCHF - Chennai, Kanchipuram Tamil Nadu 8.82 0.21 Cooperative schemes
184 TNCHF - Thanjuvar, Thiruarur Tamil Nadu 8.82 0.21 Cooperative schemes
185 Tamil Nadu HB Tamil Nadu 29.73 0.70 Housing board and local bodies
186 TNCHF - Salem Tamil Nadu 21.13 0.50 Cooperative schemes
187 TNCHF - Namakal Tamil Nadu 11.86 0.28 Cooperative schemes
188 TNCHF - Peryar Tamil Nadu 6.19 0.15 Cooperative schemes
189 TNCHF - Salem & Namakal Tamil Nadu 6.78 0.16 Cooperative schemes
190 TNCHF - Thirulvellikal Tamil Nadu 6.78 0.16 Cooperative schemes
191 TNCHF - Sivagangalikal Tamil Nadu 5.41 0.13 Cooperative schemes
192 MASS West Bengal 0.95 0.02 Nongovernment organizations
193 SA Samaj West Bengal 1.22 0.03 Nongovernment organizations
194 WBHB West Bengal 23.80 0.56 Housing board and local bodies
195 WB State Coop Agriculture Development West Bengal 16.40 0.39
Cooperative schemes
196 Tarun Sangha West Bengal 4.95 0.12 Nongovernment organizations
Total 4,226.58 100.00
Source: Housing and Urban Development Corporation Limited.
Average rate of exchange:Rs. 42.2658 =$1Serial Name of the Subborrower State
Rs million
$Million
Component Equivalent
5.88 Cooperative schemes 1 Tamil Nadu Cooperative Housing Federation
Limited Tamil Nadu 250.00
1.10 Cooperative schemes 2 Kerala State Cooperative ARDB Kerala 47.50
5.78 Cooperative schemes 3 Tamil Nadu Cooperative Housing Federation
Limited Tamil Nadu 250.00
0.31 State government corporation 4 Karnataka Power Corporation Limited
Karnataka 13.20
5.69 State government corporation 5 MP Housing Board-LOC Madhya
Pradesh 246.20
13.86 State government corporation 6 Tamil Nadu Police Housing
Corporation Limited Tamil Nadu 589.56
0.51 State government corporation 7 Maharashtra State Police Housing
Corporation Ltd Maharashtra 21.90
2.57 State government corporation Tamil Nadu Housing Board-LOC Tamil
Nadu 109.50 8
1.49 State government corporation 9 Maharashtra State Police Housing &
Welfare Corporation Maharashtra 58.28
6.93 State government corporation 10 Karnataka State Police Housing
Corporation Karnataka 325.50
2.10 State government 11 Government of Rajasthan Rajasthan 82.13
2.56 State government 100.00 12 Government of Rajasthan Rajasthan
3.85 State government 13 Government of Rajasthan Rajasthan 150.74
0.06 Private sector Kovai Maruthi Papers Tamil Nadu 2.50 14
0.37 Private sector 16.20 Tamil Nadu 15 Premier Polytronics
0.15 Private sector 6.30 Tamil Nadu 16 Prime Cotton Textiles
4.70 Private sector 17 Larsen & Toubro-Tadapatri project Andhra Pradesh
200.00
4.37 Private sector 18 Larsen & Toubro-Amreli project Gujarat 186.00
37.70 Individuals 1,598.41 19 Individuals
100.00 4,253.92
Source: Housing Development Finance Corporation Limited.
Appendix 2 25
Average rate of exchange: Rs42.5392 = $1
Table A2.3: Loan No. 1551-IND: Housing Finance Project – HDFC
(details of subloans)
Total26 Appendix 3
LENDING CHANNELS
Lending Channels for National Housing Bank, Housing and Urban Development
Corporation Limited and Housing Development Finance Corporation Limited
A. NHB
1. Under the Project, NHB’s targets for lending are:
(i) $40 million through cooperatives (part A),
(ii) $5 million through CFIs/NGOs (part A),
(iii) $55 million through refinancing HFIs (part A), and
(iv) NHB will provide $13 million as counterpart funds for equity
participation in HFCs.
2. The existing channels for lending by NHB are as follows:
(i) NHB lends to State Cooperatives, HFCs and commercial banks. State
cooperatives in turn on-lend to primary housing cooperatives for their
direct lending to member beneficiaries. HFCs and commercial banks
on-lend to households,
(ii) NHB lends to HFCs who on-lend to CFIs and NGOs. The latter in turn
on-lend to households, and
(iii) NHB lends to HFCs who on-lend directly to households.
B. HUDCO
1. Under the Project, HUDCO’s targets for lending are:
(i) $25 million through cooperatives (part A),
(ii) $5 million through CFIs/NGOs (part A),
(iii) $45 million through companies and municipalities (part A), and
(iv) $25 million for slum-improvement projects and low-income housing
projects (part B).
2. The existing channels for lending by HUDCO are as follows:
(i) HUDCO lends to State Cooperative Housing finance societies and
cooperative banks. They in turn on-lend to primary housing
cooperatives. The latter institutions then on-lend to households,
(ii) HUDCO lends to CFIs and NGOs. The latter in turn on-lend to
households,
(iii) HUDCO lends to corporations and municipalities who on-lend directly
to households, and
(iv) HUDCO lends to state or municipal bodies for funding Government
projects for low-income housing and slum improvement. Appendix 3 27
C. HDFC
1. Under the Project, HDFC’s targets for lending are:
(i) $10 million through cooperatives (part A),
(ii) $10 million through CFIs/NGOs (part A),
(iii) $65 million directly to households (part A), and
(iv) $15 million for slum-improvement projects and low-income housing
projects (part B).
2. The existing channels for lending by HDFC are as follows:
(i) HDFC lends to State Cooperative HF societies. They in turn on-lend
to primary housing cooperatives. The latter institutions then on-lend to
households,
(ii) HDFC lends to CFIs and NGOs. The latter in turn on-lend to
households,
(iii) HDFC lends to private companies/municipal corporations who on-lend
to households, and
(iv) HDFC lends directly to households.
Source: Borrowers’ reports. 28 Appendix 4
CHRONOLOGY OF MAIN EVENTS IN PROJECT ADMINISTRATION
Date Event
1996
5 Dec TA 2700-IND: Housing Finance Facility Project approved and carried out
from
January to April 1997 resulting in a proposal for the Housing Finance Project.
1997
22 Apr-7 May Fact Finding.
4 June Management Review Meeting.
17-31 July Loan Appraisal.
25-28 Aug Loan Negotiations.
25 Sep Board Approval.
6 Nov Loan Signing.
11 Dec Loans to HUDCO and HDFC declared effective.
12 Dec Loan to NHB declared effective.
24 Dec Advance of $20 million to HDFC.
31 Dec Advances of $20 million each to NHB and HUDCO.
1998
19-29 Jan Inception Mission.
2 Jul Liquidation of $20 million by HDFC.
7 Sep Liquidation of $20 million by NHB.
7 Oct Liquidation of $18 million by HUDCO.
10 Nov Liquidation of $2 million by HUDCO.
12 Nov Advance of $30 million and $40 million each to NHB and HDFC.
13 Nov Advance of $30 million to HUDCO.
12-22 Oct Review (1). The Mission found that the Borrowers and Government of
India are
in general compliant with the Loan Covenants. The Project implementation was
efficient and effective. Based on the projections from the Borrowers, the Mission
estimates that the loan proceeds would be fully disbursed and liquidated by end-
2000.
1999
1 Jan Delegation of the Project to India Resident Mission for administration.
26 Jan Liquidation of $40 million by HDFC.
19 Jul Liquidation of $8.9 million by HUDCO.
23 Jul Advance of $40 million to HDFC.
3 Sep Liquidation of $3.3 million by HUDCO.
2 Nov Liquidation of $17.8 million by HUDCO.
1 Dec 1999-
23 Feb 2000
Review (2). The three loans for the Project fully utilized and the Mission
recommended closure in September 2000 after completion of the SOE
verification by India Resident Mission. The Mission noted that although significant
progress was made in the implementation of the policy and institutional action
plan, dialogue with the Government on further actions to strengthen and expand
the housing finance system should continue with the processing of the proposed
Housing Finance II Project. Appendix 4 29
6 Dec $50 million disbursed to HUDCO as reimbursement totaling $100 million
utilization, and the closing date for the loan.
15 Dec Disbursement of $50 million to NHB as reimbursement.
23 Dec Liquidation of $30 million by NHB, and closing of the NHB loan.
2000
6-18 Mar &
4-5 Apr
Disbursement Review (1). Loans 1550/51-IND. Visited project sites and field
offices in Andhra Pradesh and Tamil Nadu and met with senior officials of
HUDCO and HDFC. The Mission reported ineligible claims relating to HUDCO
and HDFC and informed the respective Borrowers. Review determined that
HUDCO should adopt practices for instilling financial discipline to ensure project
viability and cost recovery.
29 May Liquidation of $19.9 million by HDFC.
24 July-10
Aug
Disbursement Review (2). Loans 1549/50/51-IND. Mission findings: (i) ineligible
expenses relating to NHB, (ii) sought information from HUDCO for further
scrutiny, (iii) concluded HUDCO relies on state government guarantee and has
not been monitoring its loan portfolio sufficiently in such cases, and (iv) HUDCO’s
monitoring of NGO loans displayed diligence and considerable care.
10 Dec Terminal date for commitments under HUDCO and HDFC loans.
11 Dec Terminal date for commitments under NHB.
27 Dec Liquidation of $14.6 million by HDFC.
2001
10-16 Jan Disbursement Review (3). Loan 1550-IND. This Mission was a follow-
up to an
earlier Mission fielded in CY2000. The Mission determined further ineligible
expenditures.
26 Jan Liquidation of $5.449 million by HDFC, achieving total loan utilization, and
closing
date of the HDFC loan.
26 Feb-10
Mar
Disbursement Review (4). Loans 1549/50/51-IND. A Mission from India Resident
Mission visited the state of Karnataka. The Mission concluded that a limited SOE
review in two states (Karnataka and Kerala) identified deficiencies in the records
maintained by HUDCO to substantiate loan utilization. To determine the nature
and extent of ineligible expenses, the Mission recommended an external audit by
qualified chartered accountants.
In case of the NHB component, the Mission recommended substitution of
identified ineligible expenditure with other eligible expenditure.
3, 11-12 Apr Disbursement Review (5). Loan 1549-IND. The Mission visited the
headquarters
of NHB to carry out a full review of all the supporting documents maintained by
NHB for the liquidation of $20 million. The Mission recommended: (i) an amount
of $12 million equivalent was ineligible and required to be substituted, (ii) sought
information regarding disbursement to TNACHF, and (iii) HUDCO was requested
to confirm if scheme No. 14,531 was claimed from both NHB and ADB.
23-25 May Disbursement Review (6). Loan 1551-IND. A Mission visited Bhopal,
Madhya
Pradesh office of HDFC. The Mission concluded that ADB loan proceeds, which
comprise 66% of HDFC’s loan to MPHB have been utilized for the Project
purposes of construction of housing units. The Mission requested HDFC to
provide a final physical and financial status along with list of beneficiaries
funded. 30 Appendix 4
4 Jun-8 Aug Loan 1550-IND. Staff consultants fielded by ADB in the states of
Meghalaya,
Andhra Pradesh, Tamil Nadu and Kerala which accounted for $69.95 million in
loan utilization to review adequacy of accounts and records maintained by
HUDCO and to identify both the physical and financial progress of sub-projects
financed out of the loan proceeds. An Audit Review Mission from Office of the
General Auditor joined the Consultants from 30 July to 3 August to observe the
consultant’s review of the HUDCO’s SOE and discuss the findings and possible
recommendations. The Office of General Auditor Mission observed: (i) lack of
monitoring procedure of the EA should have been identified during appraisal; (ii)
project reviews by India Resident Mission appear to be an effective tool in
determining appropriate use of funds for project purposes.
4 Dec The Staff Consultants submitted their report. The findings established the
extent
of ineligible expenses to be $10.2 million and requested HUDCO to provide
additional information to justify expenses amounting to $18.4 million. The
Consultants also observed inadequacies in the maintenance of records and
accounts, monitoring procedures, and commented upon the poor recovery
performance of HUDCO borrowers.
2002
27 Jun-9 Jul Project cum Disbursement Review (7). Loan 1550-IND. The Mission
reviewed a
set of randomly selected schemes, out of the 30 schemes offered as substitution
of ineligible schemes by HUDCO in three states. Based on the findings on the
field, the Mission recommended that an expenditure totaling $10.33 million
relating to 28 schemes be accepted for reimbursement.
22 Nov HDFC could not provide details of beneficiaries assisted under the line of
credit of
$6.936 million to the GOR. In substitution, HDFC offered a subloan to Karnataka
State Police Housing Corporation Limited. With the approval of the substitution,
India Resident Mission issued LMED for closure of the HDFC component of the
Project effective 26 January 2001.
27 Dec NHB replaced ineligible expenses identified by earlier review missions
with new
subloans, which was processed and approved by India Resident Mission. With
the replacement of ineligible expenditures, India Resident Mission issued LMED
for closure of the loan effective 23 December 1999.
27 Dec India Resident Mission recommended approval of subloans amounting to
$26.8
million to substitute the ineligible expenses and issued LMED for closure of the
HUDCO loan effective 6 December 1999.
2003
30 Jun Original loan closing date for the three loans.
GOR = Government of Rajasthan, HUDCO = Housing and Urban Development
Corporation Limited, HDFC =
Housing Development Finance Corporation Limited, LMED = Loan Milestone
Events Date, MPHB = Madhya Pradesh
Housing Board, NOG = nongovernment organization, SOE = statement of
expenditure, TA = technical assistance,
TNACHF = Tamil Nadu Apex Cooperative Housing Federation. DFI
Calendar Year Projected Cumulative Actual Cumulative
NHB 1997 - - 20.00 20.00
1998 25.00 25.00 30.00 50.00
1999 35.00 60.00 50.00 100.00
HDFC 1997 - - 20.00 20.00
1998 20.00 20.00 30.00 50.00
1999 50.00 70.00 50.00 100.00
HUDCO 1997 - - 20.00 20.00
1998 15.00 15.00 40.00 60.00
1999 25.00 40.00 40.00 100.00
Source: Loan Financial Information System.
Table A5: Projected and Actual Disbursement of Loan Proceeds
($ million)
Appendix 5 3132 Appendix 6
Executive Director Executive Director
General Manager General Manager (law)
General Manager General Manager
Deputy General Manager
Deputy General Manager Deputy General Manager
Assistant General Manager
Assistant General Manager Assistant General Manager
Regional Manager
Regional Manager Regional Manager
Manager
Manager Manager
Deputy Manager
Deputy Manager Deputy Manager
Assistant Manager
Assistant Manager Assistant Manager
Source : National Housing Bank
Table A6.1: Organization Structure of National Housing Bank
Chairman and Managing Director
ORGANIZATION STRUCTUES Board of Directors
Director
Senior Executive Executive Director Executive Executive Director Executive
Director Chief Executive Executive Executive
Director and (organizational Director (administration and (management services
Vigilance Director Director (works Director
Executive Director system) (training) building technology and human resource
Officer (north east and disposal) (law)
(projects) transfer development zone
Source: Housing and Urban Development Corporation Limited.
Company Secretary Director
Chairman & Managing Director
Table A6.2: Organization Structure of Housing and Urban Development
Corporation Limited
Appendix 6 33 General Manager, Executive Director, Executive Director,
Mumbai South North
Treasury General Manager,
Maharashtra General Manager, General Manager,
Karnataka Gujarat
Mumbai Office General Manager,
Kolkata General Manager, General Manager,
Andhra Pradesh New Delhi
Accounts
General Manager, Area Manager, Punjab/
Tamil Nadu Haryana/HP/Chandhigarh
Administration
Deputy General, Area Manager, Gujarat
Manager, Kerala
Library
Branch Manager, Deputy General Manager,
Coimbatore Uttar Pradesh
Recoveries
Dubai Branch Manager,
Indore
Secretarial & Dadar
Branch Manager,
Jaipur
Deposits
Department
Corporate Legal
Communications
Human Resouce
Development & Centre
for Housing Finance
Information Technology
User Support Group
Source:Housing Development Finance Corporation Limited.
Board of Directors
Chairman
Managing Director
Table A6.3: Organization Structure of Housing Development Finance Corporation
Limited
Technical Services
Personnel
34 Appendix 6 Appendix 7 35
NHB 1999 2000 2001 2002
Disbursements: of which 7,742.7 8,921.8 10,776.4 11,360.5
Refinance 7,583.0 8,416.8 10,082.2 10,248.0
Direct Finance 159.7 505.0 694.2 1,112.5
Cumulative Refinance of which: 43,739.9 52,156.8 62,214.8 72,513.6
Scheduled Commercial Banks 2,375.7 2,399.7 3,438.4 4,346.6
Housing Finance Companies 33,980.6 40,495.3 48,109.0 55,308.1
Others 7,383.6 9,261.8 10,667.4 12,858.9
HUDCO 1999 2000 2001 2002
Cumulative
Upto 2002
Housing
Sanctions 40,170 47,810 38,710 25,750 228,630
Releases 19,280 26,670 28,500 18,250 187,340
Urban Infrastructure
Sanctions 26,590 41,470 40,420 55,650 191,490
Releases 12,730 17,460 19,870 28,360 106,000
Total
Sanctions 66,760 89,080 79,130 81,410 420,120
Releases 32,010 43,740 48,290 46,610 293,340
% of releases 48 49 61 57
HDFC 1999 2000 2001 2002
Cumulative
Upto 2002
Approvals 40,718 53,052 68,798 90,413 401,360
Disbursements 34,243 44,927 58,030 76,166 335,700
% of disbursements 84 85 84 84
Composition of Loans Outstanding (%)
Individuals 69 72 73 73
Corporates 30 27 26 26
Others 1 1 1 1
Source: Borrowers' reports.
(Rs million)
(approvals and disbursements)
Lending Operations of the Borrowers 36 Appendix 8
1999 2000 2001 2002
Liabilities
Capital
Authorized 3,500 3,500 3,500 3,500
Issued and Paidup (wholly subscribed by RBI) 3,500 3,500 3,500 3,500
Subtotal 3,500 3,500 3,500 3,500
Reserves
Reserve Fund 4,260 5,100 6,130 7,140
Special Fund
Rural Housing Fund 700 700 700 700
Less: Amount borrowed from RBI out of 500 500 500 500
National Housing Credit (LTO) Fund
Less: Transferred to General Reserve 200
Other Reserves
Research & Development Fund 50 50 50 50
Equity Participation Fund 150 150 150 150
Savings Incentive for EWS Fund 50 50 50 50
Less: Transferred to General Reserve 250
Special Reserve in terms of Section 36 (1) 513
Investment Fluctuation Reserve 98 107 128 8
Subtotal 4,808 5,657 6,708 7,662
Balance of Net Profit 5 2 7 7
Bonds and Debentures 15,762 19,257 24,252 24,879
Deposits in HLAs 1,934 1,880 1,796 1,599
Borrowings
From Reserve Bank of India
- National Housing Credit (LTO) Fund 8,750 8,750 8,750 1,750
- Others - - - 750
From Government of India - - - -
From Other Sources
- In India 10,653 10,020 9,287 8,553
- Outside India 3,076 5,376 5,599 6,728
Subtotal 22,480 24,146 23,636 17,781
Gifts, Grants, Donations and Benefactions
Current Liabilities and Provisions 2,184 2,428 4,441 4,178
Other Liabilities 278 2,730 3,642 3,490
Total (Liabilities) 50,950 59,601 67,982 63,095
Assets
Cash and Bank Balances
Cash in hand and Balance with RBI 4 12 20 5
Balance with other banks in India and outside 282 1,528 4237 4051
Subtotal 285 1,540 4,257 4,056
Money at call and at short notice - - 311 -
Investments
Securities of Central and State Governments 1,304 1,333 753
Stocks, shares, bonds, debentures and 89 146 143 151
securities of Housing Finance Institutions
Stocks, shares, bonds, debentures, and 3,806 4,842 2,343 968
securities of other Institutions
Subtotal 5,199 6,321 3,238 1,119
Loans and Advances
Housing Finance Institutions 27,245 32,280 37,420 41,988
Scheduled Banks 869 531 1,456 2,068
State Cooperative Agricultural Rural 3,435 3,971 4,641 5,354
Development Banks/Land Development Banks
Others 220 608 998 1,859
Subtotal 31,769 37,389 44,515 51,269
Bills Purchased, discounted/rediscounted
Fixed Assets (at cost less depreciation)
Land 113 112 99 97
Premises 189 180 169 162
Others 14 11 10 13
Subtotal 316 302 277 273
Other Assets 11,447 12,169 13,588 4,780
HLA deposits with Banks/HFCs (as per contra) 1,934 1,880 1,796 1,599
Total (Assets) 50,950 59,601 67,982 63,095
Source: National Housing Bank.
FINANCIAL STATEMENTS OF NATIONAL HOUSING BANK
Item
Table A8.1: Balance Sheet
Fiscal Year Ending 30 June
(Rs million)Item 1999 2000 2001 2002
Expenses
5,935.30 5,155.30 4,680.40 Interest paid on deposits,
borrowings, etc. 4,005.60
Establishment Expenses
a
140.00 98.60 81.30 111.80
0.50 0.20 0.10 Directors', executive committee
members' 0.10
fees & expenses
0.20 0.10 0.10 Auditors' fees 0.10
12.20 11.40 10.80 Rent, taxes, insurance, lighting,
etc. 16.20
14.00 22.80 7.40 Law charges 9.10
2.90 2.80 2.10 Postage, telegram, telex, and
telephone 2.90
6.50 12.20 6.80 Stationery, printing,
advertisement, etc. 8.70
12.60 16.20 16.00 Depreciation, amortization 17.10
27.20 29.40 26.50 Other expenditure 27.20
1,582.10 1,113.60 836.90 Balance of profit carried down
585.20
7,733.50 6,462.60 5,668.40 Subtotal 4,784.00
513.10 - Less: Withdrawn from Reserve Fund -
636.60 78.50 - Less: Provision for Income Tax -
560.10 1,035.10 836.90 Balance Profit transferred to
Appropriation Account 585.20
1,709.80 1,113.60 836.90 Total 585.20
Income
7,354.30 5,825.90 4,853.60 Interest and Discount 4,067.30
124.60 498.90 786.20 Income from investments 662.10
- Commission, brokerage, etc. -
254.60 137.80 28.60 Other income 54.60
7,733.50 6,462.60 5,668.40 Subtotal 4,784.00
1,582.10 1,113.60 836.90 Balance of Profit brought down
585.20
127.70 - Transfer from Investment Fluctuation Reserve
-
1,709.80 1,113.60 836.90 Total 585.20
a
avelling expenses. includes Staff salaries, allowances, etc., and terminal benefits,
underwriting commission, brokerage and guarantee fee, and tr
37
Source: National Housing Bank.
Table A8.2: Income Statements of National Housing Bank
Fiscal Year ending 30 June
Appendix 838 Appendix 8
Item 1999 2000 2001 2002
Return on Equity (%) 7.29 9.58 10.69 8.85
Return on Assets (%) 1.15 1.42 1.59 1.37
Debt-Equity Ratio 4.9 5.3 5.3 4.5
Captial Adequacy Ratio 16.86 16.61 16.83 20.16
Debt-Service Coverage Ratio 1.16
Source: National Housing Bank.
Less than More than More than More than More than Total
or equal to 1 year up 3 years up 5 years up 7 years
1 year to 3 years to 5 years to 7 years
Rupee assets 15,215.80 21,868.60 19,012.90 13,627.40 20,137.60
89,862.30
Foreign currency assets 283.20 589.90 634.60 670.20
5,767.30 7,945.20
Total Assets 15,499.00 22,458.50 19,647.50 14,297.60 25,904.90
97,807.50
Rupee liabilities 9,079.50 18,272.80 25,772.10 8,487.90 32,275.80
93,888.10
Foreign currency liabilities 408.60 823.50 850.10 867.10
6,456.90 9,406.20
Total Liabilities 9,488.10 19,096.30 26,622.20 9,355.00 38,732.70
103,294.30
Source: National Housing Bank.
Less than More than More than More than More than Total
or equal to 1 year up 3 years up 5 years up 7 years
1 year to 3 years to 5 years to 7 years
Rupee assets 13,682.20 21,742.00 15,712.70 13,467.30 20,042.70
84,646.90
Foreign currency assets 217.80 680.90 688.80 697.50
5,289.50 7,574.50
Total Assets 13,900.00 22,422.90 16,401.50 14,164.80 25,332.20
92,221.40
Rupee liabilities 8,005.00 20,495.90 11,447.60 12,012.90
40,306.40 92,267.80
Foreign currency liabilities 345.30 921.10 909.90 900.10
6,047.80 9,124.20
Total Liabilities 8,350.30 21,417.00 12,357.50 12,913.00 46,354.20
101,392.00
Source: National Housing Bank.
Table A8.3: Ratio Analysis of National Housing Bank
Asset-Liquidity Management
(Rs million)
(Rs million)
Table A8.5: Liquidity-Maturity Pattern of Assets and Liabilities, FY2001
Table A8.4: Liquidity-Maturity Pattern of Assets and Liabilities, FY2002 39
Item 1999 2000 2001 2002
Liabilities
Capital
Equity Shares 12,500 12,500 12,500 25,000
Preference Shares - - - -
Total 12,500 12,500 12,500 25,000
Issued and Paidup 3,960 8,980 11,780 14,080
Share Application Money 1,810 - - -
Subtotal 5,770 8,980 11,780 14,080
Reserves
General Reserves 1,126 1,780 1,780 2,241
Share Premium Account - - - -
Capital Reserve - - - -
Reserve for bad and doubtful debts 92 139 194 252
Special Reserve 2,707 3,338 4,063 4,836
Debenture Redemption Reserve 1,882 1,250 1,300 1,250
KfW reserve 169 209 261 291
Research and Development Reserve 20 20 20 20
Welfare Fund - - 9 9
Subtotal 5,995 6,735 7,627 8,900
Borrowings
Loans
Government of India 524 485 439 220
Banks 14,898 28,581 40,361 47,217
Financial Institutions 25,022 28,524 42,642 32,748
Foreign Currency Loans 4,453 9,287 10,870 10,458
Others
Bonds and Debentures 43,305 44,922 43,647 63,292
Deposits
Public deposits (including interest-bearing 3,187 9,318 9,084 12,445
cash securities)
Subtotal 91,389 121,117 147,042 166,379
Current Liabilities and Provisions 8,944 8,855 8,876 11,322
Total 112,098 145,688 175,325 200,681
Assets
Cash and Bank Balances
Cash in hand and Balance with RBI 532 1,079 275 1,278
Balance with scheduled banks 9,647 9,594 8,385 8,201
Subtotal 10,179 10,674 8,660 9,478
Investments 499 2,517 2,293 2,099
Deferred Tax assets - - - 539
Loans and Advances 99,112 130,233 162,779 186,442
Fixed Assets (at cost less depreciation)
Land 90 87 86 93
Premises 442 440 466 482
Others 76 85 130 135
Subtotal 608 612 682 710
Current Assets (less cash & bank balances, loans 1,454 1,468 760 986
and advances)
Miscellaneous expenditure not adjusted 247 184 151 427
Total 112,098 145,688 175,325 200,681
Source: Housing and Urban Development Corporation Limited.
Appendix 9
Authorized
Fiscal Year ending 31 March
Table A9.1: Balance Sheet
(Rs million)
FINANCIAL STATEMENTS OF HOUSING AND URBAN DEVELOPMENT
CORPORATION LIMITED40 Appendix 9
Item 1999 2000 2001 2002
Expenses
Interest paid on deposits, borrowings, etc. 8,824 11,971 16,018
17,700
Establishment Expenses 257 253 374 476
Auditors' fees 0 0 1 1
Rent, taxes, insurance, lighting, etc. 95 164 173 165
Law charges 2 2 4 5
Postage, telegram, telex, and telephone 12 13 15
16
Stationery, printing, advertisement, etc. 30 45 36
42
Depreciation, amortization 46 50 47 91
Other expenditure 2,137 1,805 1,816 500
Balance of profit carried down 76 297 251 1,189
906 1,280 1,575 1,550
Total 12,384 15,881 20,309 21,732
Less: Provision for Income Tax 209 354 506 409
Balance Profit transferred to Appropriation Account 697 926
1,069 1,141
Total 906 1,280 1,575 1,550
Income
Interest from loans, deposits, staff, and investment 10,072 14,101
18,425 20,469
Profit on sale of investments 0 - 2 2
Net income from consultancy 1 4 2 6
Fees and other charges 283 323 288 225
Other income 2,027 1,452 1,593 1,031
Total 12,384 15,881 20,309 21,732
Source: Housing and Urban Development Corporation Limited.
(Rs million)
Fiscal Year ending 31 March
Table A9.2: Income Statements of Housing and Urban Development Corporation
LimitedItem 1999 2000 2001 2002
Profit after Tax to Capital Employed (%) 0.68 0.68 0.64 0.64
Profit after Tax to Average Assets (%) 0.78 0.77 0.71 0.64
Debt-Equity Ratio 8.28 7.98 7.5 7.64
Capital Adequacy Ratio (%) 8.28 8.13 9.49
Debt Service Coverage Ratio 1.17 1.29 0.95 1.28
Source: Housing and Urban Development Corporation Limited
Table A9.3: Ratio Analysis of Housing and Urban Development Corporation
Limited
Appendix 9 41 42 Appendix 10
1999 2000 2001 2002
Liabilities
Capital
Authorized
Equity Shares 1,500 1,500 1,500 1,500
Preference Shares 700 700 700 700
Total 2,200 2,200 2,200 2,200
Issued and Paidup 1,191 1,191 1,201 1,217
Subtotal 1,191 1,191 1,201 1,217
Reserves
Special Reserves No.1 3,185 2,935 2,694 2,344
Special Reserve No.2 2,020 3,020 4,310 6,060
General Reserve 4,510 4,976 6,200 7,651
Debenture Redemption Reserve 200 200
Share premium 8,248 8,248 8,506 8,937
Employee Stock Option Outstanding 18 27 24
Capital Redemption Reserve 500 500 500 500
Shelter Assistance Reserve 64 71 83 96
Capital Reserve 0 0 0 0
Subtotal 18,527 19,769 22,519 25,811
Borrowings
Loans
IBRD 2,617 2,341 2,066 1,790
USAID 1,428 1,368 1,221 1,075
IFC, Washington DC 725 725 725
CDC 924 739 536 336
ADB 3,696 5,474 5,587 4,705
Army Group Insurance 250 1,000 2,000 2,000
NHB 5,611 5,327 5,700 5,066
Syndicated Loan-yen 4,371
Scheduled banks 15,617 27,020 30,708 38,004
LIC 4,194 4,774 4,404 4,034
Others (Finance Lease) 4
Bonds and Debentures 10,650 18,880 29,253 41,262
Deposits
Unsecured 52,473 62,185 72,374 84,777
Interest accrued and due 51 53 124 133
Subtotal 98,236 129,885 154,698 187,557
Current Liabilities and Provisions 8,114 10,587 12,728
14,271
Total 126,068 161,432 191,145 228,856
Assets
Cash and Bank Balances
Cash in hand and Balance with RBI 174 501 795
513
Balance with scheduled banks 5,454 9,310 7,583
8,529
Subtotal 5,628 9,812 8,378 9,042
Money at call and at short notice 950 1,000 1,700
Loans
Individuals 56,315 72,394 95,850 125,659
Corporates 25,032 27,129 35,561 45,001
Others 846 1,107 836 1,032
Subtotal 82,193 100,630 132,247 171,692
Investments
Securities of Central and State Governments 1,754 2,173 2,282
1,878
Stocks, shares, bonds, debentures and 9,359 10,142 7,895
6,701
securities for financing real estate projects
Stocks, shares, bonds, debentures and 13,426 21,029 20,253
20,731
securities of other Institutions
Subtotal 24,539 33,343 30,431 29,310
Deferred Tax assets 545
Loans and Advances 9,369 13,469 13,860 13,155
Bills Purchased, discounted/rediscounted
Fixed Assets (at cost less depreciation)
Land 129 138 366 369
Premises 732 797 2,019 3,205
Others 1,702 1,196 830 691
Subtotal 2,562 2,130 3,215 4,266
Current Assets (less cash & bank balances) 828 1,047 1,314
846
Total 126,068 161,432 191,145 228,856
Source: Housing Development Finance Corporation Limited.
Item
FINANCIAL STATEMENTS OF HOUSING DEVELOPMENT FINANCE CORPORATION
LIMITED
Table A10.1: Balance Sheet
Fiscal Year Ending 31 March
(Rs million)(Rs million)
Item 1999 2000 2001 2002
EXPENSES
18,712 16,896 14,369 Interest paid on
deposits, borrowings, etc. 12,513
Establishment Expenses
a
460 394 312 249
3 2 0 Directors',
executive committee members' 0
fees & expenses
4 5 4 Auditors'
fees 3
159 125 109 Rent, taxes,
insurance, lighting, etc. 94
12 12 9 Law
charges 6
80 67 52 Postage,
telegram, telex, and telephone 49
110 107 73 Stationery,
printing, advertisement, etc. 65
318 457 436 Depreciation,
amortization 498
151 123 104 Other
expenditure 82
83 80 80 Balance of
profit carried down 80
6,909 5,557 4,608 3,889
27,002 23,824 20,155 Subtotal 17,527
1,109 820 590 Less:
Provision for Income Tax 550
5,800 4,737 4,018 Balance of
Profit transferred to Appropriation Account 3,339
6,909 5,557 4,608 TOTAL 3,889
INCOME
19,819 16,263 13,285 Interest on loans
11,551
760 1,217 1,485 Dividends
969
507 475 447 Lease rental
income 641
4,716 4,782 4,159 Other
operating income 3,617
1,122 1,028 757 Fees and
other charges 690
77 58 22 Other
income 59
27,002 23,824 20,155 Total 17,527
a
includes Staff expenses and travelling expenses.
Source: Housing Development Finance Corporation Limited.
Appendix 10 43
Fiscal Year Ending 31 March
Table A10.2: Income Statements of Housing Development Finance Corporation
Limited44 Appendix 10
Item 1999 2000 2001 2002
Return on Equity (%) 17.8 20.0 21.2 22.9
Return on Average Assets (%) 3.1 3.0 2.9 3.0
Earning per share (Rs) 28.0 33.7 39.4 48.0
Book Value per Share (Rs) 165.6 176.0 198.0 222.0
Debt-Equity Ratio 5.0 6.2 6.5 6.7
Captial Adequacy Ratio 16.2 14.1 12.7 14.5
Debt-Service Coverage Ratio 2.4 2.5 1.7
Source : Housing Development Finance Corporation Limited.
A10.3: Ratio Analysis of Housing Development Finance Corporation
LimitedAppendix 11 45
Table A11.1: Status of Compliance with Major Loan Covenants – National Housing
Bank
Covenant Reference in Loan
Document
Remarks
The guarantor and the borrower will execute the action
plan to the extent that actions thereunder are applicable
to or the responsibility of the guarantor or the borrower.
Loan Agreement
(LA), Schedule 3,
para. 1
Partially complied
with.
The guarantor and the borrower will ensure that any
involuntary resettlement resulting from the
implementation of any qualified proposal or subproject
and compensation paid thereof are undertaken in
accordance with Asian Development Bank (ADB) policy
and requirements and to ADB’s satisfaction.
LA, Schedule 3,
para. 2
Not applicable.
The borrower will cooperate in implementing a program
for benefit monitoring and evaluation (BME) of the
Project, encompassing timely realization of benefits and
completion of physical and other aspects of the Project,
especially in respect of households and cost recovery.
LA, Schedule 3,
para. 3 (a)
Not complied with.
BME activities will be turned over to the qualified
enterprises and the result of BME incorporated into a
project evaluation to be undertaken after project
implementation. Baseline conditions will be established
when qualified housing proposals and subprojects are
prepared. The BME will be carried out in accordance
with ADB’s Benefit, Monitoring, and Evaluation
Handbook and tailored to meet project conditions. The
borrower will provide ADB with the results of the BME in
the first quarterly report for each year, referred to in
Section 5.05 (b) of the Loan Agreement.
LA, Schedule 3,
para. 3 (b)
Not complied with.
Except as ADB may otherwise agree, the borrower will
submit to ADB for prior approval the first five qualified
housing proposals.
LA, Section 3.03 Complied with.
The borrowers will ensure that subloans are made only
to state and municipal agencies, cooperatives, or others
that (i) are not delinquent or otherwise in arrears in
repayment of other debt obligations; and (ii) are from
those states or union territories that are taking or have
agreed to take steps to reduce stamp duties on real
estate transactions and amend the Rent Control Laws,
consistent with the Action Plan.
LA, Section 4.04 Complied with.
46 Appendix 11

Covenant Reference in Loan


Document
Remarks
The borrower will always protect itself against any loss
resulting from changes in the rate of exchange between
the rupee and currency or currencies in which the
borrower’s outstanding money obligations will have to
be met.
LA, Section 5.02 Complied with.
The borrower will ensure that all funds, including localcurrency funds, in addition
to the loan proceeds, and
other resources that are required for the Project by
qualified enterprises to carry out their respective
Qualified Housing Proposals and Subprojects will be
available to such qualified enterprises promptly as
needed.
LA, Section 5.03 Complied with.
The borrower will maintain records and accounts
adequate to record the progress of the Project and of
each Qualified Housing Proposal and Subproject
(including the cost thereof) and to reflect, in accordance
with consistently maintained sound principles, the
operations and financial condition of the borrower.
LA, Section 5.04 Partially complied
with.
The borrower will furnish to ADB all such reports and
information as ADB will reasonably request concerning
(i) the loan and the expenditure of the proceeds and
maintenance of the service thereof; (ii) the Project; (iii)
qualified enterprises, Qualified Housing Proposals and
Subprojects, and subloans; (iv) administration,
operations, and financial condition of the borrower; and
(v) any other matters relating to the purposes of the
loan.
LA, Section 5.05 (a) Partially complied
with.
Without limiting the generality of the foregoing, the
borrower will furnish to ADB quarterly reports on the
execution of the Project and on the operation and
management of the borrower. Such reports will be
submitted in such form and in such detail and within
such a period as ADB will reasonably request, and will
indicate, among other things, progress made and
problems encountered during the quarter under review,
steps taken and proposed to be taken to remedy these
problems, and a proposed program of activities and
expected progress during the following quarter.
LA, Section 5.05 (b) Complied with.

Appendix 11 47
Covenant Reference in Loan
Document
Remarks
Promptly after the closing date for withdrawals from the
loan account, in any event not later than 3 months after
the said closing date or such later date as may be
agreed on for this purpose between ADB and the
borrower, the borrower will prepare and furnish to ADB
a report, in such form and in such detail as ADB will
reasonably request, on the utilization of the loan, the
execution of the qualified housing proposals and
subprojects, their costs, the performance by the
borrower of its obligations under this Loan Agreement
and the accomplishment of the purposes of the loan.
LA, Section 5.05 (c) Complied with.

The borrower will have its account and financial


statements (balance sheet, statement of income and
expenses, and related statements) audited annually, in
accordance with appropriate audited standards
consistently applied, by independent auditors whose
qualifications, experience, and terms of reference are
acceptable to ADB; and will, promptly after their
preparation but in any event not later than 12 months
after the close of the financial year to which they relate,
furnish to ADB (i) certified copies of the audited
accounts and financial statements and (ii) the report of
the auditors relating thereto (including the auditors’
opinion on the use of loan proceeds and compliance
with the covenants of this loan agreements as well as
on the use of procedures for the imprest account and
statement of expenditure, all in the English language.
The borrower will furnish to ADB such further
information concerning such accounts and financial
statements and the audit thereof as ADB will from time
to time reasonably request.
LA, Section 5.06 (a) (i) Complied with.
(ii) Not complied
with.
The borrower will enable ADB’s representatives to
inspect any Qualified Enterprise, any Qualified Housing
Proposal and Subproject, goods financed out of the
proceeds of the Loan, and any relevant records and
documents maintained by the borrower.
LA, Section 5.07 Complied with. 48 Appendix 11
Covenant Reference in Loan
Document
Remarks
The borrower will at all times conduct its business in
accordance with sound administrative, financial,
environmental, business, and housing practices, and
under the supervision of competent and experienced
management and personnel.
LA, Section 5.08 (b) Complied with.
Except as ADB and the borrower may otherwise agree,
the borrower will not sell, lease, or otherwise dispose of
any of its assets, except in the ordinary course of its
business.
LA, Section 5.08 ( c) Complied with.
Before establishing or acquiring any subsidiary, the
borrower will inform ADB of any such action.
LA, Section 5.08 (d) Complied with.
The borrower will keep ADB informed of any material
event having a substantial and adverse impact on the
borrower’s administrative, financial equity, and lending
operations, including decisions resulting from judicial
actions and other forms of litigation.
LA, Section 5.08 (e) Complied with.
Except as ADB and the borrower may otherwise agree,
the borrower will maintain a ratio of the consolidated
debt to consolidated equity not higher than 15:1.
LA, Section 5.09 Complied with.

Except as ADB may otherwise agree, the borrower will


ensure that the consolidated internal cash generation
for debt service for each financial year will be at least
1.2 times the consolidated debt-service requirement for
that financial year.
LA, Section 5.10 Complied with.
The borrower undertakes that, except as ADB and the
borrowers may otherwise agree, (i) if the borrower and
any subsidiary create any lien on any of their assets as
security for any debt, such lien will ipso facto equally
and ratably secure the payment of the principal of, and
interest and other charges on, the Loan, and the
borrower, in creating or permitting the creation of any
such lien, will make express provision to that effect; and
(ii) if any statutory lien is created on any assets of the
borrower or any subsidiary as security for any debt, the
borrower will grant to ADB an equivalent lien
satisfactory to ADB.
LA, Section 5.12 (a) Complied with. Appendix 11 49
Table A11.2: Status of Compliance with Major Loan Covenants – Housing and
Urban
Development Corporation Limited
Covenant Reference in
Loan Document
Remarks
The guarantor and the borrower will execute the action plan
to the extent that actions thereunder are applicable to or the
responsibility of the guarantor or the borrower.
Loan Agreement
(LA), Schedule
3, para. 1
Partly complied
with.
The guarantor and the borrower will ensure that any
involuntary resettlement resulting from the implementation
of any qualified proposal or subproject and compensation
paid thereof are undertaken in accordance with Asian
Development Bank (ADB) policy and requirements and to
ADB’s satisfaction.
LA, Schedule 3,
para. 2
Not applicable.
The borrower will cooperate in implementing a program for
benefit monitoring and evaluation (BME) of the Project,
encompassing timely realization of benefits and completion
of physical and other aspects of the project, especially in
respect of households and cost recovery.
LA, Schedule 3,
para. 3 (a)
Not complied
with.
BME activities will be turned over to the qualified
Enterprises and the result of BME incorporated into a
project evaluation to be undertaken after project
implementation. Baseline conditions will be established
when qualified housing proposals and Subprojects are
prepared. The BME will be carried out in accordance with
ADB’s Benefit, Monitoring, and Evaluation Handbook, and
carefully tailored to meet project conditions. The borrower
will provide ADB with the results of the BME in the first
quarterly report for each year, referred to in Section 5.05 (b)
of the Loan Agreement.
LA, Schedule 3,
para. 3 (b)
Not complied
with.
The borrower will ensure that all subprojects conform to the
requirements of ADB in respect of procurement,
environment, resettlement, and compensation, among other
requirements. More specifically, the subproject will be
selected on the basis of such criteria as may be agreed to
by ADB, including the following:

(i) significant development impact on low-income


groups, with preference to women,
(ii) significant demonstration impact such that other
cities, areas, institutions, or beneficiaries wish to
participate in similar subprojects,
(iii) cost-effectiveness based on a large number of
beneficiaries per unit cost,
LA, Schedule 3,
para. 4
The borrower
complied with
the LA’s
stipulation of
minimum
lending to lowincome
households. In
certain locations,
the review
missions noticed
emphasis on
ownership by
women. 50 Appendix 11
Covenant Reference in
Loan Document
Remarks
(iv) potential of replicability in other parts of the
guarantor based on ease of implementation and financial
sustainability,
(v) commitment of executing and participating
institutions, including participation of beneficiaries as
well as private institutions, and
(vi) willingness and preparedness of state and local
governments to implement subprojects quickly and in
accordance with the project and action plan.
Increased
availability of
housing finance
encouraged
demand from
beneficiaries.
Subproject proposals to be submitted to ADB for approval
will include a detailed description of the inputs and their
costs; participation of households and their responsibilities;
financing and cost recovery; any resettlement or
compensation issues, as well as proposed resolution of
such issues; implementation plan including institutional and
household responsibilities; initial environmental
examination of the subproject; and a long-term
maintenance plan. Such subproject proposal will also
include proposed measures to ensure sustainability and the
subproject’s usefulness as a pilot.

Except as ADB may otherwise agree, the borrower will


submit to ADB for prior approval the first five qualified
housing proposals.
LA, Section
3.03
Complied with.
The borrowers will ensure that subloans are made only to
state and municipal agencies, cooperatives, or others that
(i) are not delinquent or otherwise in arrears in repayment
of other debt obligations; and (ii) are from those states or
union territories that are taking or have agreed to take steps
to reduce stamp duties on real estate transactions and
amend the Rent Control Laws, consistent with the Action
Plan.
LA, Section
4.04
Complied with.

The borrower will carry out the Project with due diligence
and efficiency and in conformity with sound banking,
administrative, financial, engineering, environmental,
business, and housing practices.
LA, Section
5.01 (a)
Complied with.
The borrower will always protect itself against any loss
resulting from changes in the rate of exchange between the
rupee and the currency or currencies in which the
borrower’s outstanding money obligations will have to be
met.
LA, Section 5.02 Complied with. Appendix 11 51

Covenant Reference in
Loan Document
Remarks
The borrower will ensure that all funds, including localcurrency funds, in addition
to the loan proceeds, and other
resources that are required for the Project by qualified
Enterprises to carry out their respective qualified housing
proposals and Subprojects will be available to such
qualified Enterprises promptly as needed.
LA, Section 5.03 Complied with.
The borrower will maintain records and accounts adequate
to record the progress of the Project and of each qualified
housing Proposal and Subproject (including the cost
thereof) and to reflect in accordance with consistently
maintained sound accounting principles, the operations and
financial condition of the borrower.

LA, Section 5.04 Insufficient


compliance.
The borrower will furnish to ADB all such reports and
information as ADB will reasonably request concerning the
loan and the expenditure of the proceeds and maintenance
of the service thereof; (ii) the project; (iii) the qualified
Enterprises, the qualified housing proposals and
Subprojects, and the sub loans; (iv) the administration,
Operations and financial condition of the borrower; and (v)
any other matters relating to the purposes of the Loan.
LA, Section
5.05 (a)
Partly complied
with.
Without limiting the generality of the foregoing, the borrower
will furnish to ADB quarterly reports on the execution of the
Project and on the operation and management of the
borrower. Such reports will be submitted in such form and
in such detail and within such a period as ADB will
reasonably request, and will indicate, among other things,
progress made and problems encountered during the
quarter under review, steps taken and proposed to be taken
to remedy these problems, and proposed programe of
activities and expected progress during the following
quarter.
LA, Section
5.05 (b)
Partly complied
with.
Promptly after the closing date for withdrawals from the
loan account, in any event not later than three months after
the said closing date or such later date as may be agreed
for this purpose between ADB and the borrower, the
borrower will prepare and furnish to ADB a report, in such
form and in such detail as ADB will reasonably request, on
the utilization of the loan, the execution of the qualified
housing proposals and subprojects, their costs, the
performance by the borrower of its obligations under this
Loan Agreement and the accomplishment of the purposes
of the loan.
LA, Section
5.05 (c)
Complied with. 52 Appendix 11
Covenant Reference in
Loan Document
Remarks

The borrower will have its account and financial statements


(balance sheet, statement of income and expenses, and
related statements) audited annually, in accordance with
appropriate audited standards consistently applied, by
independent auditors whose qualifications, experience and
terms of reference are acceptable to ADB; and will,
promptly after their preparation but in any event not later
than 12 months after the close of the financial year to which
they relate, furnish to ADB (i) certified copies of the audited
accounts and financial statements and (ii) the report of the
auditors relating thereto (including the auditors’ opinion on
the use of loan proceeds and compliance with the
covenants of this loan agreements as well as on the use of
procedures for the imprest account and statement of
expenditure, all the English language. The borrower will
furnish to ADB such further information concerning such
accounts and financial statements and the audit thereof as
ADB will from time to time reasonably request.
LA, Section
5.06 (a)
(i) Complied
with.
(ii) Not complied
with .
The borrower will enable ADB’s representatives to inspect
any qualified Enterprise, any qualified housing Proposal
and Subproject, the goods financed out of the proceeds of
the Loan, and any relevant records and documents
maintained by the borrower.
LA, Section 5.07 Complied with.
The borrower will, promptly as required, take all action
within its powers to maintain its corporate existence, to
carry on its operations and to acquire, maintain and renew
all rights, properties, powers, privileges and franchises
which are necessary in the carrying out of the project or in
the conduct of its business.
LA, Section
5.08 (a)
Complied with.
The borrower will at all times conduct its business in
accordance with sound administrative, financial,
environmental, business and housing practices, and under
the supervision of the competent and experienced
management and personnel.
LA, Section .08
(b)
Complied with.
Except as ADB and the borrower may other agree, the
borrower will not sell, lease or otherwise dispose of any of
its assets, except in the ordinary course of its business.
LA, Section .08
(c)
Complied with.
Prior to establishing or acquiring any subsidiary, the
borrower will inform ADB of any such action.
LA, Section 5.08
(d)
Complied with. Appendix 11 53
Covenant Reference in
Loan Document
Remarks

The borrower will keep ADB informed of any material event


having a substantial and adverse impact on its
administrative, financial equity and lending operations,
including decisions resulting from judicial actions and other
forms of litigation.
LA, Section
5.08 (e)
Complied with.
Except as ADB and the borrower may otherwise agree, the
borrower will maintain a ratio of the consolidated debt of
the borrower to the consolidated equity of the borrower not
higher than 15:1.
LA, Section 5.09 Complied with.
Except as ADB may otherwise agree, the borrower will
undertake its operations so as to ensure that the
consolidated internal cash generation for debt service for
each financial year will be at least 1.2 times the
consolidated debt-service requirement for that financial
year.
LA, Section 5.10 Partly complied
with.
The borrower undertakes that, except as ADB and the
borrowers may otherwise agree, (i) if the borrower and any
subsidiary create any lien on any of its assets as security
for any debt, such lien will ipso facto equally and ratably
secure the payment of the principal of, and interest and
other charges on, the Loan and the borrower, in creating or
permitting the creation of any such lien, will make express
provision to that effect; and (ii) if any statutory lien will be
created on any assets of the borrower or any subsidiary as
security for any debt, the borrower will grant to ADB an
equivalent lien satisfactory to ADB.
LA, Section
5.12 (a)
Complied with. 54 Appendix 11
Table A11.3: Status of Compliance with Major Loan Covenants – Housing
Development Finance Corporation Limited
Covenant Reference in
Loan Document
Remarks
The guarantor and the borrower will execute the action plan
to the extent that actions thereunder are applicable to or the
responsibility of the guarantor or the borrower.
Loan Agreement
(LA), Schedule
3, para. 1
Partly complied
with.
The guarantor and the borrower will ensure that any
involuntary resettlement resulting from the implementation
of any qualified proposal or subproject and compensation
paid thereof are undertaken in accordance with Asian
Development Bank (ADB) policy and requirements and to
ADB’s satisfaction.
LA, Schedule 3,
para. 2
Not applicable.
The borrower will cooperate in implementing a program for
benefit monitoring and evaluation (BME) of the Project,
encompassing timely realization of benefits and completion
of physical and other aspects of the project, especially in
respect of households and cost recovery.
LA, Schedule 3,
para. 3 (a)
Not complied
with.
BME activities will be turned over to the qualified
Enterprises and the result of BME incorporated into a
project evaluation to be undertaken after project
implementation. Baseline conditions will be established
when qualified housing proposals and Subprojects are
prepared. The BME will be carried out in accordance with
ADB’s Benefit, Monitoring, and Evaluation Handbook, and
carefully tailored to meet project conditions. The borrower
will provide ADB with the results of the BME in the first
quarterly report for each year, referred to in Section 5.05 (b)
of the Loan Agreement.
LA, Schedule 3,
para. 3 (b)
Not complied
with.
The borrower will ensure that all subprojects conform to the
requirements of ADB in respect of procurement,
environment, resettlement, and compensation, among other
requirements. More specifically, the subproject will be
selected on the basis of such criteria as may be agreed to
by ADB, including the following:

(i) significant development impact on low-income


groups, with preference to women,
(ii) significant demonstration impact such that other
cities, areas, institutions, or beneficiaries wish to
participate in similar subprojects,
(iii) cost-effectiveness based on a large number of
beneficiaries per unit cost,
LA, Schedule 3,
para. 4
The borrower
complied with
the LA’s
stipulation of
minimum
lending to lowincome
households. In
certain locations,
the review
missions noticed
emphasis on
ownership by
women. Appendix 11 55
Covenant Reference in
Loan Document
Remarks
(iv) potential of replicability in other parts of the
guarantor based on ease of implementation and financial
sustainability,
(v) commitment of executing and participating
institutions, including participation of beneficiaries as
well as private institutions, and
(vi) willingness and preparedness of state and local
governments to implement subprojects quickly and in
accordance with the project and action plan.
Increased
availability of
housing finance
encouraged
demand from
beneficiaries.
Subproject proposals to be submitted to ADB for approval
will include a detailed description of the inputs and their
costs; participation of households and their responsibilities;
financing and cost recovery; any resettlement or
compensation issues, as well as proposed resolution of
such issues; implementation plan including institutional and
household responsibilities; initial environmental
examination of the subproject; and a long-term
maintenance plan. Such subproject proposal will also
include proposed measures to ensure sustainability and the
subproject’s usefulness as a pilot.

Except as ADB may otherwise agree, the borrower will


submit to ADB for prior approval the first five qualified
housing proposals.
LA, Section
3.03 (a)
Complied with.
The borrowers will ensure that subloans are made only to
state and municipal agencies, cooperatives, or others that
(i) are not delinquent or otherwise in arrears in repayment
of other debt obligations; and (ii) are from those states or
union territories that are taking or have agreed to take steps
to reduce stamp duties on real estate transactions and
amend the Rent Control Laws, consistent with the Action
Plan.
LA, Section
4.04
Complied with.

The borrower will carry out the Project with due diligence
and efficiency and in conformity with sound banking,
administrative, financial, engineering, environmental,
business, and housing practices.
LA, Section
5.01 (a)
Complied with.
The borrower will always protect itself against any loss
resulting from changes in the rate of exchange between the
rupee and the currency or currencies in which the
borrower’s outstanding money obligations will have to be
met.
LA, Section 5.02 Complied with. 56 Appendix 11

Covenant Reference in
Loan Document
Remarks
The borrower will ensure that all funds, including localcurrency funds, in addition
to the loan proceeds, and other
resources that are required for the Project by qualified
Enterprises to carry out their respective qualified housing
proposals and Subprojects will be available to such
qualified Enterprises promptly as needed.
LA, Section 5.03 Complied with.
The borrower will maintain records and accounts adequate
to record the progress of the Project and of each qualified
housing Proposal and Subproject (including the cost
thereof) and to reflect in accordance with consistently
maintained sound accounting principles, the operations and
financial condition of the borrower.

LA, Section 5.04 Complied with in


regard to retain
loan portfolio.
Compliance with
other loan
portfolio needs
improvement.
The borrower will furnish to ADB all such reports and
information as ADB will reasonably request concerning the
loan and the expenditure of the proceeds and maintenance
of the service thereof; (ii) the project; (iii) the qualified
Enterprises, the qualified housing proposals and
Subprojects, and the sub loans; (iv) the administration,
Operations and financial condition of the borrower; and (v)
any other matters relating to the purposes of the Loan.
LA, Section
5.05 (a)
Partly complied
with.
Without limiting the generality of the foregoing, the borrower
will furnish to ADB quarterly reports on the execution of the
Project and on the operation and management of the
borrower. Such reports will be submitted in such form and
in such detail and within such a period as ADB will
reasonably request, and will indicate, among other things,
progress made and problems encountered during the
quarter under review, steps taken and proposed to be taken
to remedy these problems, and proposed programe of
activities and expected progress during the following
quarter.
LA, Section
5.05 (b)
Partly complied
with.
Promptly after the closing date for withdrawals from the
loan account, in any event not later than three months after
the said closing date or such later date as may be agreed
for this purpose between ADB and the borrower, the
borrower will prepare and furnish to ADB a report, in such
form and in such detail as ADB will reasonably request, on
the utilization of the loan, the execution of the qualified
housing proposals and subprojects, their costs, the
performance by the borrower of its obligations under this
Loan Agreement and the accomplishment of the purposes
of the loan.
LA, Section
5.05 (c)
Complied with. Appendix 11 57
Covenant Reference in
Loan Document
Remarks

The borrower will have its account and financial statements


(balance sheet, statement of income and expenses, and
related statements) audited annually, in accordance with
appropriate audited standards consistently applied, by
independent auditors whose qualifications, experience and
terms of reference are acceptable to ADB; and will,
promptly after their preparation but in any event not later
than 12 months after the close of the financial year to which
they relate, furnish to ADB (i) certified copies of the audited
accounts and financial statements and (ii) the report of the
auditors relating thereto (including the auditors’ opinion on
the use of loan proceeds and compliance with the
covenants of this loan agreements as well as on the use of
procedures for the imprest account and statement of
expenditure, all the English language. The borrower will
furnish to ADB such further information concerning such
accounts and financial statements and the audit thereof as
ADB will from time to time reasonably request.
LA, Section
5.06 (a)
(i) Complied
with.
(ii) Partially
complied
with .
The borrower will enable ADB’s representatives to inspect
any qualified Enterprise, any qualified housing Proposal
and Subproject, the goods financed out of the proceeds of
the Loan, and any relevant records and documents
maintained by the borrower.
LA, Section 5.07 Complied with.
The borrower will, promptly as required, take all action
within its powers to maintain its corporate existence, to
carry on its operations and to acquire, maintain and renew
all rights, properties, powers, privileges and franchises
which are necessary in the carrying out of the project or in
the conduct of its business.
LA, Section
5.08 (a)
Complied with.
The borrower will at all times conduct its business in
accordance with sound administrative, financial,
environmental, business and housing practices, and under
the supervision of the competent and experienced
management and personnel.
LA, Section
5.08 (b)
Complied with.
Except as ADB and the borrower may other agree, the
borrower will not sell, lease or otherwise dispose of any of
its assets, except in the ordinary course of its business.
LA, Section
5.08 (c)
Complied with.
Prior to establishing or acquiring any subsidiary, the
borrower will inform ADB of any such action.
LA, Section
5.08 (d)
Complied with. 58 Appendix 11
Covenant Reference in
Loan Document
Remarks
The borrower will keep ADB informed of any material event
having a substantial and adverse impact on its
administrative, financial equity and lending operations,
including decisions resulting from judicial actions and other
forms of litigation.
LA, Section
5.08 (e)
Complied with.
Except as ADB and the borrower may otherwise agree, the
borrower will maintain a ratio of the consolidated debt of
the borrower to the consolidated equity of the borrower not
higher than 15:1.
LA, Section 5.09 Complied with.
Except as ADB may otherwise agree, the borrower will
undertake its operations so as to ensure that the
consolidated internal cash generation for debt service for
each financial year will be at least 1.2 times the
consolidated debt-service requirement for that financial
year.
LA, Section 5.10 Complied with.
The borrower undertakes that, except as ADB and the
borrowers may otherwise agree, (i) if the borrower and any
subsidiary create any lien on any of its assets as security
for any debt, such lien will ipso facto equally and ratably
secure the payment of the principal of, and interest and
other charges on, the Loan and the borrower, in creating or
permitting the creation of any such lien, will make express
provision to that effect; and (ii) if any statutory lien will be
created on any assets of the borrower or any subsidiary as
security for any debt, the borrower will grant to ADB an
equivalent lien satisfactory to ADB.
LA, Section
5.12 (a)
Complied with.

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