Micro housing finance companies choke on acute fund crunch post DHFL crisis

In the last few months, many micro housing companies had already shrunk their lending operations by 40-45% in the absence of funding

Micro housing finance companies are finding it increasingly difficult to raise funds with the crisis at Dewan Housing Finance Limited (DHFL) worsening.

During the past few years, the push for affordable housing has led to the mushrooming of several micro housing finance firms, which mostly provide loans to the informal sector. The average loan size varies between Rs 5-10 lakh.

After the crisis at Infrastructure Leasing & Financial Services (IL&FS) in September  2018, the cost of funds for micro housing companies had gone up by around 100-150 basis points. And now, after the DHFL crisis, banks and financial institutions have