In a move that could provide a fillip to affordable housing finance in India, the International Finance Corporation, a member of the World Bank Group, has partnered with the country’s largest mortgage lender HDFC to create an $800-million fund to finance construction of affordable houses.
To create this fund, IFC will pump in $200 million by subscribing to masala bonds, rupee-denominated instruments, issued by HDFC and to be listed on the London Stock Exchange. HDFC will contribute the remaining $600 million from its own resources.
The first such fund in the country will support the prime minister’s vision of ‘Housing for All’ by 2022. Property developers can borrow from this fund if they build homes that qualify as affordable under the Pradhan Mantri Awas Yojna. The fund will be managed by HDFC.
“We started working on Indian affordable housing segment in 2009. Our exposure to this segment in India is around half-a-billion dollar so far and we’ll continue to look for opportunities to invest further.
The credit behaviour of this class of borrowers is extremely good. Providing a roof over someone’s head serves a lot of purpose and at the same time it makes solid business sense too,” Subrata Dutta Gupta, South Asia Lead for Housing, IFC, told ET.
According to estimates, India needs to build 19.6 million affordable homes to provide housing for all. Of this, 11 million are to be in the urban areas and the rest in villages.
Computing five members to a household, those 19.6 million homes will provide a roof to nearly 100 million people.
According to Gupta, home ownership not only improves the quality of life directly, but also gives a fillip to the economy by increasing activity and creating a large number of jobs, which is one of the strategic priorities of IFC.
Sources – economic times dated 21-11-2017
