With the vision to impart the experiences and learnings of seasoned entrepreneurs and investors to the entire country, the Entre Cell at IIM Ahmedabad, as part of it’s How to Start a Start-up 2.0 series, hosted Rajnish Dhall, Managing Director of Micro Housing Finance Corporation Limited, a company that efficiently and sustainably enables access to housing finance services to the underprivileged and unserved segments of the population.
Rajnish, an alumnus of IIM-A, worked with American Express for 15 years after his PGDM, after which he worked for two years in the social sector before co-founding MHFC in 2008. Talking about the major factors that influenced his foray into social entrepreneurship, he recalled that one of the primary drivers was a course under Professor Anil Gupta at IIM-A where he got an opportunity to go out to villages and work with the people there for a few days. The idea of providing financial services to the underprivileged to buy houses originated when his driver asked him for a loan of ₹3 lakh to buy a house. His experience in the risk and banking industries helped him deep-dive into the nitty-gritties of the micro-finance industry.
With 30 per cent of people living in cities today and 125 million homes required, Rajnish mentioned that even if these homes are built, the question of who would finance their buying will always remain. With such a large untapped market, MHFC started with the vision to provide housing loans for the financially-excluded lower income segments. Offering the same offering as that of other mainstream banks, Rajnish added that the only difference between such banks and MHFC is the target market.
Breaking the myth that social entrepreneurship organisations are not profitable, he stressed that MHFC was not started as a charity organisation but with a strong focus to turn profitable as soon as possible. The company broke even in the second year of its inception and has been growing rapidly ever since. With over 16,000 loan sanctions currently, MHFC has an NPA of 1 per cent with a return on equity of 9 per cent, and made a profit of ₹6 crore last year.
Using a good deal of technology and data analytics, the company has developed its own formula for assessing a person’s income and payback capacity and has been widely successful in getting back its loans.
Rajnish spoke passionately about being an entrepreneur and more so, about being a social entrepreneur. He said that although there will be significant challenges, starting from the long work hours to taking care of every aspect of the start-up including building a new team, financing, finding customers, setting systems and processes, the ultimate satisfaction is unparalleled. He added that with the current buzz about entrepreneurship in the industry, there is no better time to become a social entrepreneur. With good mentors and massive opportunities and funding, he said every budding entrepreneur can take the leap.
Looking back at his journey, he said that one of his most significant learnings was that there isn’t a right model or strategy for success. He also added that compassion and passion are highly essential for being a social entrepreneur.