IFC invests USD 400 mln in HDFC to support green housing finance
Dec 23, 2022
New Delhi [India], December 23 : International Finance Corporation (IFC) has invested USD 400 million in HDFC as a loan, aimed at boosting green housing in the affordable segment to support the country's shift toward a more sustainable growth path, besides creating jobs and ensuring long-term business growth.
IFC's funding will help HDFC, India's largest housing finance company, especially focus on its green affordable housing portfolio, with 75 per cent (USD 300 million) of the proceeds earmarked for this sector.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging economies.
This investment would help close the urban housing gap and improve access to climate-smart affordable homes in India, IFC said in a statement on Friday.
The statement added that the lending framework will set rigorous standards for green buildings, allowing HDFC to boost a quality green housing pipeline while channelling funds to this segment.
Most importantly, IFC's financing package will enable the company to on-lend to borrowers, ensuring they can afford such housing.
It is estimated that 275 million people in India - 22 per cent of the population - do not have access to adequate housing, and the rural housing shortage is twice that of urban areas. As of 2018, the urban housing shortage was 29 million units, increasing by over 54 per cent since 2012, according to recent estimates.
Despite the demand, India's mortgage market remains significantly under-penetrated, reflecting massive unmet demand for housing finance.
Renu Sud Karnad, Managing Director - HDFC Ltd said, "Given our long-standing partnership, we welcome IFC's expertise to help strengthen our green affordable housing lending portfolio. We are keen to increase our footprint in funding affordable and green housing and are committed towards supporting India's efforts for a sustainable and green, low-carbon economy."
"This timely investment will help galvanize HDFC's efforts to cater to the underserved segments of the population, boosting economic resilience and supporting the government's vision of Housing for All," Karnad added, in the statement.
Residential housing accounts for around 24 per cent of India's electricity consumption. Given its climate commitments under the Paris Agreement and at the COP 27 summit, a green affordable housing sector is key to reducing the country's greenhouse gas (GHG) emissions through lower household energy consumption and greener construction activities, among others.
"With a growing need for affordable housing and a largely underpenetrated market, IFC's investment in HDFC, a leading market player, will underscore the fact that lending to underserved populations is viable, catalyzing the market segment," said Hector Gomez Ang, Regional Director for South Asia, IFC.
"In addition, it is crucial that new buildings and houses in the country are designed to be green and energy efficient to ensure sustainable development for all," added Hector Gomez Ang.
Since 2010, IFC has invested over USD 1.7 billion in India's housing finance companies for on-lending to retail buyers and affordable and green housing developers.
