Affordable housing finance companies in India: how do they ‘differently’ serve the underserved?

Abstract

Over the years, the importance of access to affordable finance has inevitably been recognized as a critical component of developing the third world. Against the backdrop of huge under-penetration of the housing finance sector in India, this study reflects on the functioning of Affordable Housing Finance Companies (AHFCs), which are among the important stakeholders providing affordable housing loans to the low-income segment households. However, the process through which these new entrants have been able to down-market housing finance remains a black box till date. In light of this research gap, this study proposes a conceptual model that succinctly captures the business process of AHFCs across three main dimensions: Outreach Approach, Lending and Underwriting Practices and Risk Management Interventions. This model reflects on the kaleidoscope of process innovations that the AHFCs have embraced to cater to the housing finance needs of the low-income customers, while achieving profitability and social impact.