Housing Microfinance: Designing a Product for the Rural Poor

Improving housing conditions for the poor is important not only from a standpoint of funda- mental human rights, but also for maintaining hygienic and dignified living conditions. There is growing evidence that demonstrates that improving these amenities may also promote productivity, ultimately leading to greater economic development. However, a large shelter- less population continues to exist across India. The rural and urban poor face variety of con- straints when transforming their houses from poor or semi-permanent materials to permanent structures. This paper discusses the potential of providing housing finance to the poor through microfinance institutions (MFIs) and issues that are likely to arise in doing so. Using a demand assessment conducted at Ankuram Sangamam Porum (ASP) in Andhra Pradesh, the paper demonstrates how an MFI can develop a housing microfinance product based on their clients’ socioeconomic status and demand for the product.