Business

$10m IFC loan for Sundaram Home

By Our Special Correspondent

NEW DELHI APRIL 29. International Finance Corporation (IFC), which is the private sector lending arm of the World Bank, today signed an agreement to provide a rupee loan equivalent to $10.2 million to Sundaram Home Finance, a Chennai-based housing finance company. Incidentally, this agreement marks IFC's first ever rupee loan in India.

Sundaram Home Finance will use IFC's loan to expand its portfolio of housing loan to individual borrowers. It plans to take loan products to underserved mortgage markets in Southern India and underwrite loans to self-employed borrowers.

Announcing the tie-up, Director of IFC's South Asia Department, Mary Ellen Iskenderian, said the arrangement worked out with Sundaram Home Finance was a part of broader IFC strategy to build a portfolio of local currency products to clients in India with much-needed financing without imposing currency risk. The loan to Sundaram Home Finance followed other innovations of the IFC in India including partial credit guarantees of bond issues and secruitisation of student loans.

For over 20 years, IFC has played an important role in addressing the housing needs of India's growing population by systematically providing debt and equity financing to leading players in the market. Now IFC's ability to offer loans in Indian rupees to clients demonstrated the organisation's commitment to India, she said.

The Managing Director of Sundram Home Finance, Nitin Palany, said "We are excited to be the first company to benefit from this new IFC product and are eager to respond to strong market demand for housing loans quickly and productively employing IFC's financing. This transaction will also enable us to leverage our ability to raise funds at competitive rates".

Sundaram Home Finance is a subsidiary promoted by Sundaram Finance with equity participation from IFC and FMO, Netherlands, with a paid up capital of Rs. 50 crores. In two years of operation, it has approved loans amounting to s. 300 crores.

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