MUMBAI: When Rajnish Dhall’s driver wanted to borrow money to buy a home, Dhall suggested he go to a bank.
But without proof of income or tax returns to show his credentials, the driver said no bank would ever lend to him.
It was the start of a whole new business for Dhall, a former banker whose firm aims to help the hundreds of millions of informal workers who make up the bulk of India’s labour force.
They are the newly emerging home-owning class.
“My driver was earning a steady income and could have paid back the loan easily, yet none of the banks would lend to him because he didn’t have the necessary paperwork,” Dhall said.
“The housing problem is very real and visible, especially in a city like Mumbai. There is certainly aspiration to own a home, but without finance, there is no way to realise the aspiration.”
Dhall lent his driver the money, then looked more closely at home loans for a host of other workers in the informal sector.
Of India’s 470 million-strong workforce, about 90 per cent is in the informal sector.
They include domestic help, street vendors, daily wage earners and small business operators, who may have no collateral and whose incomes are irregular.
They have few options besides borrowing from money lenders and employers, Dhall found.
So he set up Micro Housing Finance Corp to give home loans to low-income and informal workers.
More homes are desperately needed. Already, one in three Indians live in cities, many in crowded slums and other informal settlements.
Every year, tens of thousands of villagers migrate to cities in search of jobs, and the pace of urbanisation is set to rise.
India has a shortage of about 20 million urban homes; the shortfall disproportionately affects families earning less than Rs 16,000 ($248) a month, according to consultancy KPMG.
Prime Minister Narendra Modi has made affordable housing a priority, offering incentives such as subsidised loans to meet a 2022 target of ‘Housing for All’, even as critics say the plan bypasses the homeless. — Reuters
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