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Lastly, I would like to thank my parents for their moral support and my friends
with whom I shared my day-to-day experience and received lots of suggestions
that improved my quality of work on this project.
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ROHAN KUMBHA
Table of Contents
1. Executive summary
7. Bibliography 38 & 39
8. Annexure 40-42
List of Tables
The research instrument used in this research was questionnaire. The questions were framed
according to the requirement of finding results of the research. The questionnaire included close-
ended questions. These were distributed to the people living below the level of poverty line in
Delhi/NCR. The data was collected and was analyzed using Microsoft Excel to find out the
results and reach on the conclusion of the research.
The result showed the citizens who don’t own a house and living in a rented house due to high
prices of the houses. Analysis of the data revealed that people with a average income wants to
buy the house but due to high prices charged by the private builders there is no scope of buying a
house. Affordable housing is beneficial because affordable housing improves living conditions of
the people. It is also helps in giving every citizen his/her own house. Under affordable housing
people with low income can apply online and they need to fulfill certain criterion. Policy
measures have focused on the shortage of housing, and the Pradhan Mantri Awas Yojana is an
ambitious move towards this. Housing finance is a pre-requisite for meeting housing needs.
Therefore, government policy must focus on creating a facilitative robust environment for
housing.
Housing shortage in India can be classified into urban and rural housing. Both problems have
their own dimensions. The urban housing shortage adds to about 20 million units – therefore, the
target of Housing for All is a daunting number! The problem seems even more acute once we
realize that the population pyramid depicts yawning shortage at the lower segments. The growth
in business in year 2016-17 was obviously impacted by macro factors including demonetization.
However, new entrants in housing finance business continued to spread both geographically as
also in terms of customer profile.
Chapter – 1
Introduction
1.1. About the Project
The challenges faced by the people who buy homes are when to make investment in property. At
times when suitable economic conditions results in a rise in incomes the real estate prices
equivalently rise making it difficult for buyers to purchase homes despite having a higher
income. Moreover when the economy deteriorates income fall and so do real estate prices, hence
people become more skeptical about their income and therefore they make purchases cautiously.
Affordable housing can be beneficial scheme to this dilemma of housing and can provide
housing to all sections of society.
Affordable Housing-Definition:
Different countries have defined affordable differently. In the United States, the typical
definition of affordable housing is that the cost of houses should not exceed 30% of a
household’s gross income level. The cost of houses in this definition includes taxes, insurance
and utility costs. If the monthly costs of maintaining a home exceed 30 to 35% of the total
household income, that housing is considered to be unaffordable
The Economically Weaker Section who earns incomes of less than INR 150000 per
annum can usually afford a housing unit of up to 300 sp. Ft.
The Lower Income Groups who can earn between INR 15000 to 300000 per annum can
afford homes in the range of 300 sq. ft. to 600 sq. ft.
The Middle Income Groups who earns INR 300000 to 1000000 per annum can afford
homes that range from 600 sq. ft. to 1200 sq. ft.
The Comparison between Low Cost Housing and Affordable Housing:
Affordable housing and low cost housing are two terms that are often interchangeably used;
however, they largely vary from each other. Low cost housing is usually meant for the
Economically Weaker Section and a small proportion of the Lower Income Group, therefore it
consists of the bare minimum amenities. Low cost houses are usually located in the city but
recently, given the high cost of land they are being constructed around the suburbs. Often, it is
government agencies who construct low cost homes due to its low profitability. For one to pay
for a low cost home the most common source of finance are microfinance institutions at the risk
of lending funds are high.
On the other hand, affordable housing is mostly meant for the Lower Income Groups and the
Middle Income Groups. Affordable homes include the basic amenities such as security and
essential community amenities. Generally, it is private developers and sometimes government
agencies and that construct affordable homes, which are situated in the city. The financial
instructions that lend money to affordable home buyers are not limited in number and include a
majority of commercial banks.
• Plans to give a credit-linked subsidy to weaker and mid income sections on loans taken
for new construction or renovation of existing homes.
• Interest subsidy of 3 per cent to 6.5 per cent has been announced for loans ranging
between ₹6 lakh and ₹12 lakh.
• EWS and LIG category who wish to take a loan of up to ₹6 lakh, there is an interest
subsidy of 6.5 per cent for tenure of 15 years.
• Government will chip in with financial assistance for affordable housing projects done in
partnership with States/ Union Territories for the EWS
Allotting the houses on the ground floors to the differently abled and senior citizens will
be given higher priority.
Beneficiaries will be provided a 6.5% interest subsidy on the housing loans, for 15
years.
Minimum unit (house) size enhanced from 20 sq. (under IAY) to 25 sq. including a
dedicated area for hygienic cooking.
Enhancement of unit assistance from Rs. 70,000 to Rs. 1.20 lakh in plains and from Rs
75,000 to Rs.1.30 lakh in hilly states
The cost of unit (house) assistance is to be shared between Central and State
Governments in the ratio 60:40 in plain areas and 90: 10 for North— Eastern and 3
Himalayan States
Identification and selection of beneficiaries, based on the housing deficiency and other
social deprivation parameters in SECC-2011 data
Provide central assistance to implementing agencies through States and UTs for
providing houses to all eligible families/beneficiaries by 2022.
Implemented as Centrally Sponsored Scheme (CSS) except for the component of credit
linked subsidy this will be implemented as a Central Sector Scheme.
Its entire component has become effective from the date 17.06.2015 and will be
implemented up to 31.03.2022.
BENEFICIARIES
(URBAN)
Beneficiaries include economically weaker section (EWS), low-income groups (LIGs)
and Middle Income Groups (MIGs).
Annual income cap is up to Rs 3 lakh for EWS, Rs 3-6 lakh for LIG and Rs 6-18 lakhs
for MIG.
EWS category of beneficiaries is eligible for assistance in all four verticals of the
Missions.
LIG and MIG categories are eligible under only Credit linked subsidy scheme (CLSS)
component of the Mission.
Beneficiary family will comprise husband, wife, unmarried sons and/or unmarried
daughters.
Beneficiary family should not own a pukka house either in his/her name or in the name
of any member of his/her family in any part of India.
For identification as a EWS or LIG beneficiary under the scheme, an individual loan
applicant will submit self-certificate/ affidavit as proof of income.
Duration:
Phase I (April 2015 - March 2017) to cover 100 Cities selected from States/UTs as per
their willingness.
Phase II (April 2017 - March 2019) to cover additional 200 Cities
Phase III (April 2019 - March 2022) to cover all other remaining Cities
All 4041 statutory towns as per Census 2011 with focus on 500 Class I cities would be
covered in three phases.
1.2 Objective of the Study
To measure the various requirements which people feel are basic when they buy or rent a
house.
To know more about the various subsidy offers given by the government to low level income
category.
To measure the steps which are taken by the government in this direction after the scheme is
being introduced.
To recommend the various methods through which the government can improve.
To measure the needs of people who are linked with affordable housing.
To ensure that the location of housing offers residents adequate access to transport,
employment, services, and to social and support networks.
Chapter - 2
Literature review
Magma Fincorp Limited is a Non-Banking Financial Company (NBFC). NBFC are those
business firms who provide loans to the small scale industries and medium scale industries.
NBFC works on only one motive that is profit earning so that is why these companies charge
higher interest rate from banks and other financial institutions. The risk factor is high in case of
loan given by a bank or loan given by a NBFC. They disburse loans on the basis of hire
purchase, mortgage, chits, etc.
NBFC provide a variety of services including equipment leasing, hire purchase, loans,
investments and chit fund activities. These companies play an important role in providing credit
to the unorganized sector and to the small borrower’s at the local level.
Non – Banking Financial Companies do offer all sorts of banking services, such as loans and
credit facilities, retirement planning, money markets, underwriting and merger activities. These
companies play an important role in providing credit to the un-organized sector and to the small
borrowers at the local level.
The rapid growth of NBFCs has led to a gradual blurring of dividing lines between banks and
NBFCs, with the exception of the exclusive privilege that commercial banks exercise in issuance
of cheques. This paper provides exhaustive accounts of the functioning of and re-cent reforms
pertaining to NBFCs in India.
NBFCs have turned out to be engines of growth and are integral part of the Indian financial
system, enhancing competition and diversification in the financial sector, spreading risks
specifically at times of financial distress and have been increasingly recognized as
complementary of banking system at competitive prices.
The Banking sector has always been highly regulated, however simplified sanction procedures,
flexibility and timeliness in meeting the credit needs and low cost operations resulted in the
NBFCs getting an edge over banks in providing funding.
The Indian financial system consists of the various financial institutions, financial
instruments and the financial markets that facilitate and ensure effective channelization of
payment and credit of funds from the potential investors of the economy. Non-banking
financial institutions in India are one of the major stakeholders of financial system and cater
to the diversified needs by providing specialized financial services like investment advisory,
leasing, asset management, etc.
Non-banking financial sector in India has been a considerable growth in the recent years.
The aim of the present study is to analyze the financial performance and growth of non-
banking financial institutions in India in the last 5 years. The study is helpful for the
potential investors to get the knowledge about the financial performance of the non-banking
financial institutions and be helpful in taking effective long-term investment decisions.
The study was made to analyze the performance of five NBFCs in India. The annual reports
of these companies are evaluated so as to ascertain investments, loans disbursed, growth,
return, risk, etc. To sum up, the study is concluded that the NBFCs are earning good
margins on all the loans and their financial efficiency is good.
In Indian Economy, there are two major Financial Institutions; one is banking and other is
Non-Banking. The Non-Banking Financial Institutions plays an important role in our
economy as they provide financial services on wide range, they also work to offer enhanced
equity and risk-based products, along with this they also provide short to long term finance
to different sectors of the economy, and many other functions. This paper examines the
latest trends in Non-Banking Financial Institutions. This paper analyses the growth and
enhanced prosperity of financial institutions in India.
The distinction between banks and non-banks has been gradually getting blurred since both the
segments of the financial system engage themselves in many similar types of activities. At
present, NBFCs in India have become prominent in aside range of activities like hire-purchase
finance, equipment lease finance, loans, investments, etc.
The Indian Non-Banking Finance Company (NBFC) sector has often been relegated to the
shadows, in most discussions on the Indian Financial Services (FS) industry. Banks, insurance
companies and capital market players take centre stage and invariably, NBFCs attract public
attention only during times of crisis. Little attention has been paid to the silent but effective
manner in which NBFCs have spread their operations across the country. NBFCs have provided
financial solutions to sections of society who hitherto were at the mercy of unorganized players
for credit and savings products.
A Comparative Study of NBFC in India was delivered on economically and socially usurious
terms. Ironically, in recent times, NBFCs are once again in the spotlight for their perceived
strengths and capabilities rather than their problems. While this re-rating ought to bring cheer to
a much maligned sector, degree of caution needs to be instilled within potential investors in
NBFCs, who need to clearly understand the true drivers of value for finance companies. This
understanding is imperative to enable a better judgment of the intrinsic worth of NBFCs.
This article proceeds to illustrate the key factors responsible for the strong re-rating of the
NBFC sector, as well as discuss the validity of each of these factors, as actual drivers of value.
Today, the NBFC sector is as financially sound as it has ever been. To an extent, this can be
attributed to the very problems affecting the sector which have resulted in the purging of several
players, leaving the fittest few to dominate the landscape.
Chapter – 3
Companies Profile
HISTORY
Magma Fincorp Limited (formally known as Magma Leasing Limited) was incorporated in 1988
by Mr. Mayank Poddar and commenced operation in 1989. In 1992, the company merged with
Arm Group Enterprises to strengthen its presence and later in 1996 entered retail financing
business for vehicles and construction equipment. In the year 2000, with the Acquisition of
Consortium Finance Ltd, Magma expanded its network across Northern India. In 2007, Schrachi
Infrastructure Finance merged with Magma increasing the company's footprint in southern and
western India. In the same year, the company formed a joint venture with International Tractors
Limited (ITL) to enter tractor finance business. In 2008, Magma re-branded and renamed itself
as Magma Fincorp Limited. In 2009, Magma inked a joint venture with German insurer HDI
Gerling to enter general insurance business. The company has received its R1 license in April
2011. In the same year, Magma picked up 7% stake in the newly formed Experian Credit
Information Company of India Pvt Ltd, the Indian arm of the global credit information services
company. In 2011, Kohlberg Kravis Roberts – a large global PE firm and International Finance
Corporation, an arm of the World Bank Group invested about $100 mn in Magma. In 2012,
Magma acquired GE Money Housing Finance and GE Money Financial Services. In 2016 Mr.
Mayank Poddar stepped down as the chairman and was succeeded by Mr. Narayan K Seshadri as
the new chairman.
Magma Fincorp Limited (MFL) is a Kolkata based non-banking financial company registered
with the Reserve Bank of India as an Asset Finance Company. The company operates more than
280 branches in 22 states and a union territory and has a strong presence in rural and semi-
rural India.
PRODUCTS/SERVICES
Magma Fincorp Limited has a "diversified product portfolio" and has a strong presence in semi-
urban and rural areas. Magma's financial products include
Provides loans to customers with or without proof of income, through its 'Income Proof' and
'Non-Income Proof' schemes, extending its service to a wide range of customers.
Facilitates exchange schemes, where Magma buys old cars at attractive prices and finance
new cars at customer-friendly terms.
Vertical segregation of sales, credit and collection functions has helped Magma achieve a
rapid turnaround time in customer service.
Construction & Strategic Construction Equipment Finance
Tractor Finance
Initiated the financing of used commercial vehicles and financed first-time buyers and 2–15
years' old commercial vehicles through schemes addressing the needs of the lower-end
customer segment.
Established equipment valuation norms, which were checked by independent valuation
experts and resident equipment managers prior to disbursement.
Installed a credit programme that ensured customers’ compliance with existing practices.
Strengthened process to reduce turnaround time coupled with stringent mentoring of asset ad
collections.
Magma Housing Finance
In Feb 2013, the company acquired 100% equity share capital of GE Money Housing Finance
(an affiliate of GE Capital India) engaged in Housing Finance in India and the home equity loan
portfolio of GE Money in two separate transactions. Following the acquisitions, GE Money
Housing Finance (GEMHF) has been renamed as Magma Housing Finance Company. This
acquisition marked the entry of Magma into the mortgage finance business. Magma Housing
Finance Co commenced fresh disbursement in May 2013 and started offering financing products
under 3 broad product lines viz. Home Loans, Home Equity (Loan against Property) &
Construction Finance.
It provides financing facility to small, medium and large businesses in need of fleet of cars
Serves over 140 large & medium company’s fleets across 14 states in India.
Financial Results
Magma’s loan assets under management as on 31 March 2014 were valued at INR 17,877 Crore.
The company disbursed INR 9,081 Crore in FY 2014. Total revenues for FY13-14 grew by 24%
year over year to INR 2,117 Crore and PAT grew by 10% year over year to INR 160 Crore. In
Q4, FY17 Magma reported a loss of Rs 122 crore and a lower profit of Rs 13 crore for FY17.
Loss on account of NPA sale of Rs 678 crores impacted the PAT by Rs 145 crore. However, the
gross and net NPA ratios improved sharply to 6.7% and 5.6% respectively as on 31 March 2017
against 9.9% and 7.5% as on 31 December 2016.
Corporate Social Responsibility
With various CSR initiatives, Magma Fincorp spent 283.99 Lacs in FY 2015-16. The company
received the Asia Pacific HRM Congress Awards 2015 in the category of Best CSR practices.
The research is an exploratory as well as descriptive in nature. The research instrument used in
this research is a questionnaire with close-ended questions.
A well-structured questionnaire was prepared keeping in mind the objectives of the study. One to
one interaction with respondents was being done to ascertain their point of view on various
aspects which was covered in the structured questionnaire.
Then, the questionnaire was tested for its reliability and validity and distributed to the persons to
find out their nature towards affordable housing introduced by government.
Sample size
The sample size for this research was 50 respondents who were given the questionnaire to fill to
find out the results for the research.
Sources of data
Primary sources and secondary sources of data were used to carry out this research.
Data was collected by distributing the questionnaire to the people earning an average income or
people who are below poverty line in Delhi/NCR
Statistical instrument
In this research, Microsoft excel was used to analyze the data to reach on conclusions.
Chapter - 5
Data collection and data analysis
For the research I have used Primary source of data which is Questionnaire. The research is an
exploratory as well as descriptive in nature. The research instrument used in this research is a
questionnaire with close-ended questions. A well-structured questionnaire was prepared keeping
in mind the objectives of the study. One to one interaction with respondents was being done to
ascertain their point of view on various aspects which was covered in the structured
questionnaire.
Then, the questionnaire was tested for its reliability and validity and distributed to the people of
low income category and how they feel about applying in the affordable housing scheme.
Data Collection
Data Analysis
Analysis of data is a process of inspecting, cleaning, transforming, and modeling data with
the goal of discovering useful information, suggesting conclusions, and supporting decision-
making.
Data Sources
In this research, the data for the study was drawn from a number of employees working in
different sectors through questionnaires. The wide-ranging data provided by the respondents
was carefully examined in order to fulfill the objective and to reach on a relevant conclusion.
After carefully examining the data, the following results are drawn which are presented in the
form of tables and pie charts. Based on the results, interpretation was made.
Different types of housing people currently live in
Table 1:
Figure 1:
Duplex, 20%
Apartments, 58%
Home, 22%
Interpretation
The above graph shows that more people are living in apartments and least respondents are
living in duplex where as people living in home are not more.
Cities people are living in
Table 2:
Figure 2:
No. of Respondants
Noida
27%
New Delhi
42%
Gurgaon
31%
Interpretation
The above graph shows that the respondents are from which part of the coverage area. The
maximum % of respondents are from New Delhi and least from Noida.
Best described current housing situation of people
Table 3:
1. Owner 8%
2. Rent 72%
3. Living with others but not paying rent 20%
Total 100%
Figure 3:
Owner
Living with 8%
others but
not paying
rent
20%
Rent
72%
Interpretation
The housing situation in of people can be seen above as we can see that maximum people are
living in a rented house and there are very few owners.
Level of satisfaction with current living arrangements
Table 4:
1. Yes 16%
2. No 78%
3. Not Sure 6%
Total 100%
Figure 4:
80
78
70
60
50
30
20
10 16
6
0
Yes No
Interpretation
The above information will help the government to make plans for the people who are not
satisfied with their living arrangements.
Reasons why people are dissatisfied with their living arrangements
Table 5:
20%
15%
10%
5%
0%
Interpretation
We can see that maximum people are dissatisfied due to bad neighbor’s i.e. 23% and the least
expensive options people are least dissatisfied i.e. 6%.
Level of satisfaction where people used to live
Table 6:
40%
35%
30%
25%
20%
38%
15%
26%
10%
14% 15%
5%
7%
0%
5 (Strongly 4 (Agree) 3 (Neutral) 2 (Disagree) 1 (Strongly
Agree) Disagree)
Interpretation
The above graph shows that 38% people are satisfied with change in living arrangements but still
there still 7% people who are dissatisfied.
Level of satisfaction of people who applied for affordable housing scheme
Table 7:
S. No. Factors Number of respondents (in %)
50%
45%
40%
35%
30%
25%
45%
20%
15%
10% 20%
17%
5% 11%
7%
0%
5 (Strongly 4 (Agree) 3 (Neutral) 2 (Disagree) 1 (Strongly
Agree) Disagree)
Interpretation
Maximum number of respondents is satisfied with the affordable housing scheme, but there is
still people who think that this scheme is not meant for them.
Affordability of a household if buying a property
Table 8:
S. No. Income levels Number of respondents (in %)
1. Up to rs4,00,000 30%
2. rs4,00,000 to rs6,00,000 40%
3. rs6,00,000 to rs8,00,000 16%
4. rs800000 to rs10,00,000 11%
5. rs10,00,000 & above 3%
Total 100%
Figure 8:
40%
35%
30%
25%
20%
Number of respondents (in %)
15%
10%
5%
0%
Up to rs4,00,000 rs4,00,000 to rs6,00,000 to rs800000 to rs10,00,000 &
rs6,00,000 rs8,00,000 rs10,00,000 above
Interpretation
This graph shows the different prices which different households can afford if they are willing to
apply for affordable housing scheme.
Most important factors for people while choosing a home or apartment.
Table 9:
S. No. Factors choosing Home Number of respondents (in %)
Close to
bus/transit stops
Number of Cost I can
6%
Bedrooms afford
7% 7%
Close to health
care facilities
15% Close to services
9%
Close to schools
15%
Close to shopping
11%
Close to
family/friends
9%
Interpretation
In this people the basic health facility factor the most and factor close to bus stop is least opted
reason.
Willingness of people to move from their home or apartment.
Table 10:
Figure 10:
60
62
50
40
38 Number of respondents (in %)
30
20
10
0
Yes No
Interpretation
This shows that for affordable housing scheme the customer base of government and other
private companies is good. The people who are not willing to go with are 38%.
Chapter-6
Conclusions
It is true that economic growth is beneficial to India as currently it is one of the primary
aims of the government. What the government is not looking is the social costs of this
aim.
Although economic growth is resulting in increased across most sections of society, real
estate prices are soaring at a much faster rate, therefore making homes unaffordable to a
majority of people, whereas shelter is meant to be provided to all of the population
improving the standard of living.
Although the concept affordable housing sounds straightforward and uncomplicated,
there are numerous obstacles that stand in the way of achieving it, due to convoluted
government policies.
For affordable housing to be fruitful in India the government would have to take into
account all the sections of society and costs that would be sustained. In addition, new and
more efficient policies would have to be introduced into real estate market.
Bibliography
REFERENCE BOOKS:
RESEARCH PAPERS:
Journal Title: A Critical Review on Making Low Cost Urban Housing in India
Published: 2016
Published: 2014
5. https://magma.co.in/loans/housing-finance/
QUESTIONNAIRE
Greetings!
I am a student of Banarsidas Chandiwala Institute of Professional Studies. As a part of our
Summer Training Project, I have undertaken the topic - GOVERNMENT INICIATIVES ON
AFFORDABLE HOUSING. The data collected through this questionnaire will be used only for
academic purpose and will be treated with utmost confidentiality.
Personal Details
Name: _____________________
Age: ____
Marital status: ___________
Qualification_________________________
Family Structure (Joint/Nuclear) ________________
6. How would you rate your overall satisfaction where you used to live?
1 2 3 4 5
7. How would you rate your overall satisfaction after applying in affordable housing
scheme?
1 2 3 4 5
Up to rs4,00,000
rs4,00,000 to rs6,00,000
rs6,00,000 to rs8,00,000
rs800000 to rs10,00,000
Close to services
Close to Work
Close to shopping
Close to family/friends
Close to schools
Number of Bedrooms
10. Would you like to move from your current home or apartment?
Yes
No