Attitude of Loan Officers in Affordable Housing Finance Companies towards Low-Income Customers in Central India

The access to finance for the low-income households is severely constrained by the operational and institutional factors of mainstream finance institutions such as banks and large housing finance companies (HFCs) in India. These factors have greater effect on the access of unbanked population to housing finance as it includes large amount of money for a longer tenure thereby increasing the risk associated with the credit. The institutions engaged into dealing with such credit risk face the challenge of information asymmetry which is tackled by these institutions at various levels during the credit underwriting of a particular application. The first level of this screening and underwriting process involves interaction of the field employees of the institutions who act as first level loan officer for an application. The role of first level loan officer gets easier while screening the application of high-income and middle-income borrowers, as these customers possesses the required documents. But, in the case of the low-income households engaged in informal sector, they don’t possess the required documents and have volatile incomes, as a result, the credit assessment becomes challenging. The role of the first level loan officers becomes imperative in these types of cases where the applicants do not fit the regular documentation criterion. In this study, we attempt to investigate the attitudes of the loan Officers of select Affordable HFCs (AHFCs) towards the low-income household customers. The study presents a descriptive analysis of attitudes of the loan officers belonging to select AHFCs in the Nagpur region in Maharashtra. The results of the study indicate that the loan officers carry a positive attitude towards poverty. The result can be seen as a contribution towards research in the area of investigating attitudinal constraints and its effects on the poor.