IFC World Bank GroupIt extended a $400 million loan to India’s largest conglomerate Mortgage Lender, HDFC, to increase green housing in affordable segment. IFCFunding will help HDFC Pay special attention to it Green Affordable Housing Portfolio75% or $300 million of revenue is earmarked for this sector.
Additionally, the lending framework will set stricter standards for green buildings, allowing HDFC to increase its quality green house pipeline while channeling funds to this segment. IFC’s financing package also aims to leverage HDFC’s lending to the public.
“Building on our longstanding partnership, we welcome IFC’s expertise to help strengthen our green Affordable housing lending portfolio,” said Renu Sud Karnad, Managing Director, HDFC. “We are keen to increase our footprint in financing affordable and green housing, and are committed to supporting India’s efforts towards a sustainable and green low-carbon economy.”
According to him, this timely investment will help fuel HDFC’s efforts to cater to the underprivileged segment of the population, boost economic recovery and support the government’s vision of housing for all. India has an estimated 275 million people, about 22%. Population, inadequate housing, and housing shortage in rural areas is twice as high as in urban areas. As of 2018, the urban housing shortage stood at 29 million units, a 54% increase from 2012. Despite the demand, India’s mortgage market remains significantly underserved, reflecting the massive unmet need for housing finance.
“With growing demand for affordable housing and a largely underpenetrated market, IFC’s investment in HDFC underscores the potential of affordable housing lending, which will drive market segmentation,” said Hector Gomez Ang, IFC’s regional director for South Asia.
According to him, it is very important that new buildings and houses in the country are designed to be green and energy efficient to ensure sustainable development.
Residential houses account for about 24% of India’s electricity consumption. Based on its climate commitments under the Paris Agreement and 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 measures.
Since 2010, IFC has invested over $1.7 billion in India’s housing finance companies.
This year, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, harnessing the power of the private sector to end extreme poverty and increase shared prosperity as economies grapple with the impacts of global crises.
A green building or sustainable design is the practice of increasing the efficiency of buildings and their sites in the use of energy, water and materials and reducing impacts on human health and the environment for the entire life cycle of a building.