Low and middle-income borrowers will be able to own homes with improved access to finance, thanks to a new investment aiming to boost affordable housing finance in India, a joint statement said.
Aligned with the government of India’s goal to provide ‘Housing for All,’ the funding will also help generate jobs, it said.
At least 25 per cent of the financing has been earmarked for green affordable housing, which is likely to encourage this market in India, it said.
“Green housing is largely regarded as a luxury market in the country, but given its climate benefits, IFC intends to challenge that perception and help boost green affordable housing by partnering with HDFC, with its deep penetration in the Indian housing market and significant commitment to promoting green,” it said.
“This partnership with IFC covering both themes Affordable & Green housing, we hope, will materially further our outreach,” HDFC Ltd managing director Renu Sud Karnad said.
Green affordable housing can help India on its path to deliver on its commitments under the Paris Agreement, to reduce a third of its carbon emissions by 2030 from 2005 levels, it said.
Green and energy efficient housing can help cut emissions, as residential housing accounts for about 24 percent of the nation’s electricity consumption, it said.
This partnership with HDFC offers multiple benefits for India, as it can play a leading role in developing the country’s nascent green affordable housing market, while delivering jobs and a climate dividend, said Hector Gomez Ang, Regional Director for South Asia at IFC.
With most banks and housing finance companies in India still at the stage of evolving their business models to lend to lower income people, this investment should send a clear demonstration that green affordable housing is viable and needed, especially as India moves on the road to recovery from the impacts of COVID-19, Ang added.
IFC estimates there’s a USD 1.25 trillion investment opportunity in green residential housing in India to the year 2030, it said.
To help grow the market, IFC has made investments worth over USD 920 million in housing finance companies in India—85 per cent in the last five years—for on-lending to retail buyers of affordable housing and developers of affordable and green housing, it added.