ASIAN DEVELOPMENT BANK                                                                                                                                                                                                                                                                                                                               PCR: IND 30011 
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                      PROJECT COMPLETION REPORT 
                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                    ON THE 
                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                   Housing Finance Project 
                                                                                                                                                                              (Loans 1549-IND, 1550-IND, and 1551-IND) 
                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                      IN  
                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                           INDIA 
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                                                                                                                                                                                                                             August 2003 
                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                            
                                                                        
                                                                        
                                                                                                                                                                                                                                                                                                              
                                                           
                                             CURRENCY EQUIVALENTS 
                                           Currency Unit – rupee/s (Re/Rs) 
               
                                  At Appraisal                     At Project Completion 
                                            20 August 1997         26 January 2001 
                          Re1.00 = $0.028                          $0.21 
                           $1.00 = Rs35.7                          Rs46.4 
               
                                                 ABBREVIATIONS 
                        ADB       –      Asian Development Bank 
                        ARDB      –      Agricultural and Rural Development Bank 
                        AMC       –      Ahmedabad Municipal Corporation 
                        BME       –      benefit monitoring and evaluation 
                        CAR       –      capital adequacy ratio 
               CFI                –      community-based finance institution 
               CBO – community-based organization 
                        FIRE      –      financial institutions reform and expansion 
                        HDFC      –      Housing Development Finance Corporation Limited 
                        HFC       –      housing finance company 
               HFI                –      housing finance institution 
                        HUDCO  –         Housing and Urban Development Corporation Limited 
                        KfW       –      Kreditanstalt fur Wiederaufbau 
                        MBS       –      mortgage-backed security 
               NGO – nongovernment organization 
                        NHB       –      National Housing Bank 
               NPA – nonperforming asset 
                        RBI       –      Reserve Bank of India 
                        SOE       –      statement of expenditure 
                        TCS       –      thrift and credit society 
                        USAID     –      United States Agency for International Development 
               UK  – United Kingdom 
               
                
                                                           
                                                           
                                                           
                                                      NOTES 
               
              (i)    The fiscal year (FY) of HDFC and HUDCO ends on 31 March, and of NHB, 30 June.  FY 
                     before a calendar year denotes the year in which the fiscal year ends, e.g. FY2001 ends 
                     on 31 March 2001 for HDFC and HUDCO, and 30 June 2001 for NHB. 
               
              (ii)   In this report, “$” refers to US dollars. 
                                                           
                                                                                                                          
                                                                      
                                                              CONTENTS 
                                                                                                                                                           Page 
                 BASIC DATA                                                                                         iii 
                  
                 I. BACKGROUND                                                                                      1 
                         A. History                                                                                 1 
                         B.      Scope of Operations                                                                1 
                         C.      Relationship with Asian Development Bank and Other Lenders                         2 
                         D.      Relevance of Design and Formulation                                                2 
                         E.      Related Technical Assistance                                                       3 
                  
                 II. IMPLEMENTATION                                                                                 3 
                  A. Lending Policies                                                                               3 
                         B.      Characteristics of Subloans                                                        3 
                         C.      Implementation and Internal Operation of Subprojects                               5 
                         D.      Operational Performance of the Borrowers                                           6 
                         E.      Borrower’s Financial Performance                                                   7 
                         F.      Financial Statements and Ratios                                                    8 
                         G. Covenants                                                                               8 
                         H.      Performance of the Asian Development Bank                                          9 
                           
                 III. EVALUATION                                                                                    9 
                  A. Loan Appraisal                                                                                 9 
                  B. Implementation                                                                                 11 
                   
                 IV. ASSESSMENT AND RECOMMENDATIONS                                                                 11 
                         A. Relevance                                                                               11 
                         B.      Efficacy in Achievement of Purpose                                                 12 
                         C.      Efficiency in Achievement of Outputs and Purpose                                   12 
                         D.      Preliminary Assessment of Sustainability                                           12 
                         E. Other Impacts                                                                           13 
                         F. Overall Assessment                                                                      13 
                         G. Lessons Learned                                                                         13 
                         H. Recommendations                                                                         14 
                  
                 APPENDIXES 
                  
                 1. Loan Utilization                                                                                15 
                 2.      Details of Subloans                                                                        19 
                 3. Lending Channels                                                                                26 
                 4.      Chronology of Main Events in Project Administration                                        28 
                 5.      Projected and Actual Disbursement of Loan Proceeds                                         31 
                 6.      Organizational Structure                                                                   32 
                 7. Lending Operations                                                                              35 
                 8.      Financial Statements of NHB                                                                36 
                 9.      Financial Statements of HUDCO                                                              39 
                 10.     Financial Statements of HDFC                                                               42 
                 11.     Statement of Compliance with Major Loan Covenants                                          45 
                                                                                                                                  (iii) 
                                                                              
                                                                              
                                                                     BASIC DATA 
                     
                         A. Loan Identification 
                          
                                   1. Country                                   India 
                                   2. Loan Numbers                              1549/50/51-IND 
                                   3. Loan Title                                Housing Finance Project  
                                   4. Borrowers                                 National Housing Bank (NHB), Housing and Urban 
                                                                                Development Corporation Limited (HUDCO), and 
                                                                                Housing Development Finance Corporation Limited 
                                                                                Ltd. (HDFC) 
                                   5.   Name of Development                     NHB, HUDCO, and HDFC 
                                        Financial Institutions                   
                                   6.   Amount of Loan                          $100 million each to NHB, HUDCO, and HDFC, 
                                                                                totaling $300 million 
                                   7.   Project Completion Report               PCR: IND 759 
                                        Number 
                                    
                         B. Loan Data 
                              
                                   1.  Appraisal                                       
                                          - Date Started                              17 July 1997 
                                          - Date Completed                            31 July 1997 
                                                                                       
                                   2.  Loan Negotiations                               
                                          - Date Started                              25 August 1997 
                                          - Date Completed                            28 August 1997 
                                                                                       
                                   3. Date of Board Approval                          25 September 1997 
                                                                                       
                                   4.  Date of Loan Agreement                         6 November 1997 
                                                                                       
                                   5. Date of Loan Effectiveness                       
                                                                                       
                                        -    In Loan Agreement                        4 February 1998 
                                        -    Actual                                    
                                              -   NHB                                 12 December 1997 
                                              -   HUDCO                               11 December 1997 
                                              -   HDFC                                11 December 1997 
                                        -    Number of Extensions                     None