The International Finance Corporation (IFC) has extended a $400-million loan to mortgage major HDFC for financing green affordable housing units, as part of their efforts towards supporting climate goals.
The companies, in separate statements on Friday, said this loan will help close the urban housing gap and improve access to climate-smart affordable homes by boosting green housing, which will go some ways in supporting the country's shift towards a more sustainable growth path, creating jobs and ensuring long-term business growth.
HDFC said it has earmarked 75%, or $300 million, of the IFC funding for financing green affordable housing units.
It is estimated that 275 million people in the country, or 22% of the over 1.4 billion population, do not have access to adequate housing, and rural housing shortage is twice that of urban areas. As of 2018, the urban housing shortage was 29 million units, increasing by over 54% since 2012.
"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 the nation's efforts for a sustainable and green, low-carbon economy," Renu Sud Karnad, managing director of HDFC, was quoted as saying in the statement.
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 vision of housing for all, she added.
Residential housing accounts for around 24% of the country's electricity consumption. According to climate commitments under the Paris agreement and at the climate change conference COP-27 at Sharm el-Sheikh, the green affordable housing sector is key to reducing greenhouse gas 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 loan to HDFC underscores the fact that lending to the underserved populations is viable, said Hector Gomez Ang, regional director for South Asia at IFC.
Since 2010, IFC has lent over $1.7 billion to the domestic housing finance companies for on-lending to retail buyers and also to developers of affordable and green housing.
