MAS Fin forays into rural housing, mortgages

Ahmedabad-based, non-banking finance company, MAS Financial Services Ltd, a specialised retail financing organisation will set up a rural housing and mortgage company in joint collaboration with a leading financial institution.

Mukesh Gandhi, director finance, MAS Financial Services, told Business Standard, "We are setting up a joint venture rural housing finance and mortgage company in collaboration with a leading financial institution."

The joint venture has been set up with the aim of tapping the unexplored and virgin market of housing finance and mortgage business in rural areas of the country.

"The initial capital base for the new company will be Rs 10 crore," added Gandhi. MAS Financial Services is open to holding a 74 per cent stake in the new company.

According to the firm, most of the housing finance business are urban-centric and seeing the demand growth of housing reaching at 35 per cent in urban areas, there remains a huge untapped market to be explored in the rural areas for housing finance.

Initially the company will start its operation from Gujarat and at a later phase it will spread its wings to other parts of the country. The company will be operational by September this year. However, the company had declined to reveal the names of the other partners.

MAS Financial Services has a customer base of 250,000 on its own and it would leverage their new business of housing finance, claims the company.

The company's main targets are the rural population that needs minimal amount for building a new house, renovation, extension or anything else.

The main feature of this housing finance will be to provide loans to people who do not have proof of their income. Gandhi claims that its company has set up an excellent verification system that checks the authenticity of the borrower and its credibility to pay back the loan.

The company has a focussed-approach in retail asset lending in micro loans, micro-enterprise loans, two-wheeler loans, commercial vehicle loans, pre-owned car loan, mortgage loan and agri-based loan.

The targets customers are urban poor but are self-employed. Customers for the product are made of tea-stall owners, or small time traders.

Bellwether Mirco Finance fund, one of the leading microfinance fund, in India and world wide that had invested Rs 6.5 crore through redeemable preferential shares in MAS Financial Services.

The company which presently specialises in retail financing, had a disbursement of Rs 200 crore for the financial year-ended on March 31, 2007.

For FY2007-08, the company plans to disburse Rs 350 crore. The net profit for the FY07-08 stood at Rs 6.86 crore.