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MANA 298
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CASE STUDY – MAURITIUS HOUSING COMPANY Ltd (2011) The Mauritius Housing Company Ltd is a state-owned financial company dwelling in only Housing Finance Sector. The MHC Ltd was established in 1963 and since then it has been at the forefront in innovative housing solutions for individuals that has hugely contributed to making 85% of the Mauritian population become owners of their home. MHC also enjoys the continuous support from Government, which is reinforced by the fact that Mauritius is a democracy and hence it enjoys very good political stability However MHC has not evolved as fast as its competitors and is now finding it more and more difficult to attract viable customers. Consequently its position as Market Leader, with 24% of the market, is being eroded by its main competitors – the banks and the insurance companies. Even more so that the business of Housing Finance individuals is now small due to the high percentage of home ownership. This competition has also made access to funds problematic and MHC now has to borrow at commercial rate and this automatically leads to higher lending rates to customers. This impact is somewhat mitigated by Government’s subsidy to the lower and lower-middle income groups, that is those drawing less than Rs 15,000/- per month. In order to counteract this situation, MHC has initiated a fund raising scheme, the Housing Deposit Scheme, that offers attractive savings rate based on the principle of fixed deposits in banks. Government also helps MHC by also subsidising these rates by including a Government bonus on the HDC savings at term. This scheme was quite successful at its inception but has now stagnated since Government’s imposition of a tax of 15% on interest rate paid on saving accounts placed in banks and financial institution. MHC operates mainly with two housing loan products – The Normal Loan and the Government Sponsored Loans. They operate also one PEL (Plan Epargne Logement) Account, to enable prospective customers constitute a savings for their project. A Housing Loan Scheme for young Professional is being studied for the last five years. However, the existing schemes have not evolved much since being introduced twenty years ago. Conditions of the loans are fixed – ONE RATE AND SAME CONDITIONS FOR ALL - and no negotiations, based on specificities of customers, are allowed, like in other financial institutions. This has driven away many young professionals that presented high possibility of cross selling.. Similarly, MHC has done very little in the past years to improve its delivery to its customers. There has been no opening of new branches (only three throughout the island in Curepipe, Fla
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