HDFC has been making inroads into
varied spheres of development, while retaining a focus on
low-income housing and related issues over the past two decades.
During this year, HDFC further consolidated its operations as a
wholesaler in micro-finance and weaker section housing, while
advancing the reconstruction activities at Gujarat into an
intensive phase. In addition, HDFC has been engaged in some
specific micro-finance initiatives involving for e.g. policy
frameworks and developing case studies; these have been captured
in a separate section below.
Lending
Operations in Weaker-Section Housing
HDFC continued to utilise the
Kreditanstalt für Wiederaufbau (KfW) lines (HDFC II and HDFC III)
by making loans to Non Governmental Organisation (NGO)
intermediaries and state government agencies towards low-cost
rural and urban EWS housing projects. Under the second line
comprising DM 30 million as grant (HDFC II), HDFC has drawn the
full amount from KfW (INR equivalent Rs. 67.98 crore) and all
sub-projects have now reached completion. This includes loan
disbursements in the amount of Rs. 56.91 crore and the balance has
been released as grant funds towards rehabilitation housing
projects in response to natural calamities.
The third line, also a grant of DM
30 million is split into two components – the smaller component
of Euro 6 million is towards the micro-enterprise Finance Facility
(MFF), whereas Euro 9.34 million have been earmarked towards the
EWS housing component. The cumulative loan approvals,
disbursements and related information for the housing projects
under HDFC II and III is furnished in Table I.
The KfW has recently reviewed the
progress under HDFC II and III and they have gathered that the
borrowers were generally in control of their housing process,
leading to optimal use of available resources, and good
construction quality. The cost ceiling for housing construction
has been increased to Rs. 60,000 per housing unit, as a
consequence of which the end-borrower loan size has increased from
the current level of Rs. 45,000 to Rs. 54,000 (upto 90% of cost).
MFF Lending
and KfW Lines for Micro-Finance
During the year, HDFC has approved
11 income-generation projects under the Micro-enterprise Finance
Facility i.e. MFF component of HDFC III. On a cumulative basis,
HDFC has approved 51 livelihood projects with a disbursement of Rs.
12.16 crore. The borrowing agencies, which act as social and
financial intermediaries, range from professional micro-finance
institutions (MFIs) to development NGOs to self-help group (SHG)
federations. Until March 31, 2003, HDFC has covered over 35,000
EWS households, so far, and HDFC has experienced near 100%
recoveries under the scheme.
Under the National Renewal Fund —
Self Employed Women's Association (NRF — SEWA) component
comprising a special grant of DM 2.4 million from KfW towards
micro-enterprise development (Sanjivani Project), HDFC has
disbursed as at March 31, 2003, a cumulative amount of Rs. 4.37
crore to SEWA Bank, Ahmedabad. The SEWA Bank has utilised the
funds in disbursing 2470 loans to their women members, covering a
variety of livelihood activities. The bank's cumulative
disbursements under this project stood at Rs. 4.15 crore, with an
average loan size of Rs. 17,000.
During the year KfW conducted an
appraisal of the proposed Microfinance Refinance Facility (HDFC V,
fifth line). As an outcome of which, bilateral funding of Euro 10
million has been committed, which includes a loan of Euro 9
million and the balance as a grant towards technical assistance
(TA) and capacity building measures. In the first round of MFI
selection, out of the eight detailed appraisals carried out, four
prominent Indian MFIs have been identified viz. Bharatiya
Samruddhi Finance Ltd., Friends of
Women’s World Banking, DHAN
Foundation and the Indian Association for Savings and Credit (IASC).
HDFC may include more MFIs in the program at a later stage. The
Ministry of Economic Cooperation (BMZ), Federal Republic of
Germany has also approved HDFC V; and the TA and capacity building
measures are expected to commence shortly.
Specific
Developments in Micro-Finance
Global Compact: The United Nations Global Compact
selected a business case from HDFC which was presented at the
Annual Learning Forum held at Berlin in December 2002. The case
comprised HDFC’s role in the formation of the Indian Association
for Savings and Credit (IASC), a section 25 company carrying out
retail micro-finance operations in south India. HDFC participated
in the Learning Forum meeting at which the IASC case was discussed
and this also generated substantial interest in the international
development community. The case has now been uploaded on the
global compact web-site www.unglobalcompact.org
RBI nominated Informal Working
Groups: In order to understand and initiate appropriate action
on various design and delivery issues facing the Indian
micro-finance sector, the Reserve Bank of India (RBI) constituted
four informal working groups. HDFC was invited to be a part of the
working group on “Funding Issues of MFIs” comprising besides
HDFC, the Oriental Bank of Commerce, BASIX and Sa-Dhan. The group
jointly worked on this assignment and held meetings with several
practitioners, MFIs, NGOs, micro-finance experts and banks in
preparing a report with certain recommendations. This report was
submitted to the RBI in March 2003.
Case Studies on Community
Infrastructure Financing: The World Bank in its initiative to
document the successful financing of community infrastructure
projects, approached HDFC to prepare two case-studies that
highlight such financing mechanisms. The DFID has offered to fund
the costs of case-study preparation. HDFC has selected the
following two cases where loan funding has also been committed,
(a) Madurai Vattara Kalanjiam, a self-help group federation
promoted by the DHAN Foundation which has undertaken a
slum-housing project at Madurai and (b) IASC, which launched an
innovative toilet-financing scheme for the palmyrah workers
community at Kanyakumari.
Shelter
Assistance Reserve
A broad spectrum of social causes
involving over 110 development agencies and NGOs were supported
under the Shelter Assistance Reserve during the year. HDFC
extended grants towards several social and Social Initiatives and
the overall utilisation from the reserve stood at Rs. 2.94 crore
for the year 2002-03. Cited below are a few examples of such NGOs
and institutions, which are committed to different social issues,
reflecting the general application of the reserve.
Association
for Cricket for the Blind in India
Focusing on their ‘abilities’
rather than their ‘disabilities,’ this association has been
promoting cricket for the blind in India. They organise Zonal,
State and National level tournaments wherein several teams from
across the country participate. HDFC was approached to sponsor the
2nd World Cup Cricket for the Blind, which was played in Bangalore
and Chennai in December 2002. The tournament provided an
opportunity to over 100 participants to compete at an
international level.
Sir
Shapurji Billimoria Foundation
The Sir Shapurji Billimoria
Foundation was established in 1998 with the objective of
undertaking research and training for the promotion of integrated
education —the concept being that mainstream schools should
accommodate children of varying abilities. Since its inception,
the foundation has addressed the needs of children of different
capacities and redesigned teacher education. This has enabled
teachers to enhance the optimal development of these children. The
foundation’s research and training programmes have been
supported by HDFC with financial assistance.
Family
Planning Association of India (FPAI)
The FPAI is currently the
country’s leading voluntary family planning organisation,
supported by the government as well as international donors. It
runs projects all over the country with a network of over one lac
volunteers trying to reach vital health information to the most
marginalised communities. HDFC teamed up with FPAI in supporting
their projects dealing with promoting the knowledge of family
planning and population policies and improving the health status
of adolescent girls.
ChildLine
India Foundation
The ChildLine India Foundation is
India’s first national, 24-hour, free emergency phone outreach
service for children in need of help. The Foundation has emerged
as a unique example of co-operation between government and
nongovernment agencies with child welfare being the key focus.
Through a network of NGOs in each city the Foundation responds to
the immediate as well as long-term needs of urban street children.
HDFC has extended financial support to ChildLine towards its
operational costs. These services have now expanded to 39 cities
across the country.
http://www.hdfc.com/we_development.asp
Head Office :
HDFC, Ramon House, 169, Backbay Reclamation,
H T Parekh Marg, Churchgate
MUMBAI 400 020.
Tel: 56316000, 22820282 - HDFC Board line
Working Days : Monday to Friday
Working Hours : 9:30 am to 5:15 pm
Gujarat
Earthquake Rehabilitation Measures
During the year, HDFC made steady
progress in the post-earthquake rebuilding measures being carried
out at the worst affected districts of Gujarat, by way of
utilisation of the financial assistance available from KfW under
the fourth line.
HDFC is operating the grant
component (HDFC IV/1) of Euro 10.22 million, which envisages the
reconstruction of destroyed houses and social infrastructure in
rural areas, through several partner NGOs. These local agencies
are responsible for fully implementing the reconstruction projects
by ensuring close participation of the beneficiary households.
The earthquake reconstruction
programme had commenced with the involvement of only three (key)
partner NGOs. However, a favourable Euro / INR exchange rate over
the past two years has resulted in surplus grant funds being
available out of the KfW line. This necessitated frequent revision
in the allotment of the grant funds by way of increased sanctions
to the existing NGOs in similar or new projects. HDFC also
identified new partner NGOs and housing projects, on the basis of
certain socioeconomic and / or disaster criteria while also taking
into account the capabilities of the new NGOs.
Until March 31, 2003, HDFC has
released grants of Rs. 19.84 crore which has resulted in the
construction of over 3000 houses across four districts. The
projects have achieved a reasonable degree of self-help
contribution from the owners, mostly in the form of voluntary
unskilled and semi-skilled labour, salvaged building materials and
cash investments for the provision of additional facilities in the
core house. HDFC also procured consultancy support for the project
to ensure earthquake resistant construction. The technical
assistance has kept a focus on local social characteristics
thereby encouraging design flexibility, innovative low-cost
building methods and capacity building of the implementing NGOs in
scaling up the construction activity.
Table II lists the different type
of housing projects undertaken by the NGOs with average costs per
unit.
One of HDFC’s main partner
NGO’s, the Kutch Nav Nirman Abhiyan, a network of over twenty
development organisations operating at Kutch, has carried out
extensive work in the area of earthquake housing over the past
thirty months.
However, this intervention is now
drawing to an end. At this juncture, there is a strong-felt-need
for a long term institution which would exclusively engage in
innovation, planning, designing and training in all areas of the
built form, and would train rural and urban entrepreneurs in
construction related technologies. The shelter division of Abhiyan
is therefore in the process of being hived off as a separate
organization called ‘‘Hunnar Shaala’’ (House of Skills),
being registered as a Section 25 company. During the year, HDFC
has played an active role in advising and guiding Abhiyan in
launching the Hunnar Shala.
The loan component of Euro 15.33
million (HDFC IV/2) had been approved towards refinancing of
sub-loans made by HDFC in the earthquake-affected areas.During the
year, HDFC availed of the first tranche of Euro 10.22 million by
way of refinancing of retail home loans originating at Ahmedabad
and Vadodara offices covering urban and semi-urban areas in the
affected districts. The full drawal of the loan is likely to be
effected by December 31, 2003.
