After Meera Devi’s shanty house was demolished in 1976, her husband and she, along with their two young children, were relocated by the government to Delhi’s Jahangirpuri locality. She has spent the last three decades earning a living by working as domestic help for the neighboring middle-class families. Despite living in a government allotted housing unit for over 30 years, she had no title documents to her house. It was a “dead” asset, not recognized by any formal financing institution. That was until Sitara (SEWA Grih Rin Housing Finance) decided that the possession slip, issued by Delhi government agency was proof enough of her right to stay in the house and reduce any risk of eviction. This “progressive tenure” document was enough to extend a home improvement loan to her.
An estimated 26–37M urban households in India live in informal housing, often without formal property documents. In Mumbai, every second resident lives in a slum. The bulk of these households are low-income, with annual incomes between INR 3,00,000 to 6,40,000 ($4,600–$9,200). The lack of property titles locks these households out of the formal housing finance market. As importantly, it makes it hard for them to access basic services, government schemes and even banking services, all of which require proof of address. This has led to a thriving, informal property market. The average value of a house in Bengaluru’s slums is INR 15,00,000 ($23,000), with at least 2% of properties being transacted or sold informally every year, despite the lack of proper titles.
The government of India announced an ambitious target of “Housing for All” by 2022, with a strong push to promote affordable housing. However, a majority of affordable housing is self-built, and financing solutions are required to help households build these affordable units. Formal financing institutions insist upon clear property titles, which is often absent in the case of informal settlements. Its residents therefore continue to meet their housing needs incrementally and use whatever financing mechanism is available to them. E.g. ~30% of MFI loans are used for meeting housing needs.
As Omidyar Network India, we believe in backing bold entreprenuers and their business models which create a meaningful life for every Indian, which in this case is to address the lack of property title documents and create financing solutions for households that need it the most. Our investment in Sewa Grih Rin Limited (SGRL) is a testament to our belief in supporting new and innovative business models which improve tenure security and unlock market access for informal citizens in India.
SGRL provides small-ticket loans (average INR 2,50,000 or US$3500), 7-10 year tenure loans to low-income households, living in informal settlements, to help them invest in improving the quality of their housing. Often, these households do not hold proper documentation demonstrating their ownership of the house or their right to live in that house. SGRL works closely with these families to help them formalise their property documents with the local government before giving them the housing loan.
These loans are extended to the woman in the family, and ensure that the woman’s name is included in the property documents, thus also further empowering these women. SGRL’s underwriting models are built around assessing the informal incomes of the borrowers and the range of property documentation (registered title, government issued letter, utility bills etc) available with consumers. SGRL has facilitated upgradation, modification or formalization of the borrower’s available documents, and used the resulting “progressive tenure” to underwrite the risk in many cases.
We believe that SGRL is unlocking housing finance for an underserved consumer segment and helping consumers like Meera Devi improve their housing conditions and security of tenure, thus helping create and sustaining a more meaningful life, and that is why we invested.
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