World Bank's investment arm, International Finance Corporation (IFC) has proposed to make a $400 million (around Rs 3,400 crore) loan to mortgage lender HDFC Ltd, with an aim to drive India’s green housing growth.
The capital will help HDFC boost its green affordable housing portfolio, with 75% (around $300 million) of the proceeds earmarked for this sector, the company said in a statement.
“We are keen to increase our footprint in funding affordable and green housing and are committed towards supporting India's efforts for a sustainable and green, low-carbon economy. This investment will help galvanize HDFC’s efforts to cater to the underserved segments of the population, boosting economic resilience and supporting the government’s vision of housing for all,” said Renu Sud Karnad, managing director – HDFC Ltd.
Additionally, the lending framework will set rigorous standards for green buildings, allowing HDFC to boost a quality green housing pipeline while channelling funds to this segment. Besides, IFC’s financing package will enable the company to lend to borrowers, ensuring they can afford such housing, the statement further added.
Earlier in April, HDFC Ltd decided to merge with its banking subsidiary HDFC Bank. It had agreed to acquire its parent and the country’s largest mortgage lender for about $64 billion in an all-stock deal to create a $160 billion financial services behemoth that will be better positioned to tap soaring demand for home loans.
“With a growing need for affordable housing and a largely underpenetrated market, IFC’s investment in HDFC will underscore the fact that lending to underserved populations is viable, catalyzing the market segment,” said Hector Gomez Ang, regional director for South Asia, IFC.
IFC, claimed to be the largest global development institution, focusses on private sector in emerging markets. Since 2010, it claims to have invested over $1.7 billion in India’s housing finance companies for on-lending to retail buyers of affordable housing and developers of affordable and green housing.
