CDC Group, the UK’s development finance institution, has announced a Rs 360 crore (around $50 million) investment in a women-centered Social Bond program of housing finance company Aavas Financiers Ltd (Aavas).
The investment will be made in form of rupee denominated bonds (masala bonds) and will be listed as a social bond, in alignment with the International Capital Market Association’s Social Bond Principles. The proceeds of the bonds will 100% be used to finance the women-owned property loan portfolio, with an aim to address gender inequity in asset ownership, in India, CDC and Aavas said in a statement.
This facility follows CDC’s Rs 200 crore ($ 27 million) commitment to Aavas in 2018, which enabled the company to extend affordable housing loans to low- and middle- income customers in underserved communities in India.
Srini Nagarajan, Managing Director, Head of Asia, at CDC Group, noted that the loan demonstrates its commitment to direct its long-term capital toward expanding housing access and accelerating social impact across India.
"Bridging the gap in demand and supply of housing in India as well as addressing the gender disparity in property ownership, will help transform the country and accelerate productive and inclusive development over the long term, both locally and across the wider region,” added Nagarajan.
The transaction forms CDC’s first gender directed lending facility in Asia.
"…there is considerable scope for improvement, particularly in low-income groups, to own property and more importantly further to obtain mortgage loans for their housing and business needs. Aavas helps address critical gap in access to home loans and MSME loans for people working in informal sector. CDC investment will support to deepen our customer segment by contributing to growth of our women owned property loan book,” said Sushil Kumar Agarwal, Managing Director & Chief Executive Officer at Aavas.
Ghanshyam Rawat, Chief Financial Officer at Aavas Financiers Ltd, added, “With this issue, Aavas aims to diversify its resource base which will also enable us to benchmark our long-term debt instruments globally.”
CDC, which will be renamed British International Investment in April, is providing the support to Aavas in form of a gender directed lending facility which will target financing toward women. This will allow Aavas to increase lending to its women customer-base, enabling them to gain greater access to finance which will facilitate ownership of properties by women, the statement said.
It claimed that the transaction will address the shortage in affordable housing, which is estimated to reach a shortfall of 100 million units by 2022, predominantly in lower income groups.
Currently, only 9% of households in India being legally women-owned, access to finance is a key factor that impedes women’s ability to own property, the companies added in the statement.
In India, CDC has an existing portfolio of around $2 billion (approximately Rs 15,260 crore) and globally it has invested close to Rs 69,500 crore. Last year, CDC had announced commitment to invest up to $1 billion in climate funding in India over five years.
