New funding will help increase access to housing finance among economically weaker sections (EWS) and low-income groups (LIG), including women borrowers in India, with IFC’s investment of up to $100 million in IIFL Home Finance Limited (IIFL HFL). The investment aims to catalyze India’s affordable housing space, promote green construction, and support India’s climate goals.
In India, rapid urbanization is driving the need for affordable housing with an estimated 38 million housing units needed by 2030, of which EWS and LIG represent over 96% of housing needs. Despite the demand, lower-income groups, particularly women, often lack the capital or credit history required to obtain a mortgage, making adequate housing out of reach for many. Under the partnership, 50% of funding is earmarked to promote housing finance for women borrowers, with the remaining 50% dedicated to financing green housing for buyers in this underserved segment.
As per IFC estimates, India‘s green buildings market accounts for only 6% of residential buildings, despite representing a US$1.25 trillion opportunity between now and 2030. As part of the partnership, IFC will provide a performance-based incentive from the UK-IFC Market Accelerator for Green Construction Program (MAGC) to accelerate the implementation of IIFL HFL’s green building strategy and catalyze the uptake of green-certified affordable housing units.
Complementing this, IFC advisory services will also help strengthen IIFL’s green housing portfolio through knowledge sharing using the Excellence in Design for Greater Efficiencies (EDGE) framework and supporting capacity building for staff on green certification. IIFL will also leverage IFC’s expertise in capacity building for diversity and inclusion to increase the proportion of women borrowers in its portfolio.
“We at IIFL Home Loans have not only been providing housing loans to EWS/LIG but also enabling them with better quality of living. Through this unique partnership with IFC, we shall be aiming to bring sustainable living in self-constructed houses. Together, we aim to pave the way for other housing finance companies and development finance institutions to further the cause, and we are extremely honored to work with a partner like IFC,” said Mr Monu Ratra, ED & CEO, IIFL HFL.
“Through this investment, IFC aims to bolster financial inclusion, improving access to funds for low-income women borrowers while developing the nascent green housing segment in the country,” said Allen Forlemu, IFC’s Regional Industry Director for Financial Institutions Group, Asia and the Pacific. “Supporting innovative solutions like blended finance that advance gender inclusion and green investment is central to IFC’s strategy and we are proud to be working with a leading market player to expand access to adequate affordable housing finance—key for inclusive and sustainable economic growth in India.”
As of March 31, 2023, IIFL HFL has provided more than 12,500 loans to Beneficiary Led Construction and Affordable Housing Project under Pradhan Mantri Awas Yojana, which aims to support the construction of 20 million urban and 10 million rural homes by 2024 and aligns with the Government of India’s vision to ensure ‘Housing for All.’ IFC’s funding with its maximum component focused on self-construction of green affordable housing will further the momentum in this space.
Affordable and green housing remains a strategic focus area for IFC in India, having invested over $2.2 billion since 2013 in housing finance companies and developers in the country—$1.32 billion in the last five years—for on-lending to retail buyers of affordable housing and developers of affordable and green housing.
📌 About IIFL HFL
IIFL Home Finance Limited (IIFL HFL) is a subsidiary of IIFL Finance Limited, with 79.59% shareholding, while Abu Dhabi Investment Authority acquired 20.41% stake in the company in 2022. IIFL HFL is one of India’s leading housing finance companies and is a preferred choice for affordable home loan requirements. As of 31st March 2023, the AUM stood at Rs 28512 Cr of which home loan is 76% of the total with an average ticket size of Rs 14 lakh. The Return on Assets (ROA) for the period is at 4.0%. Through affordable home loans, IIFL HFL makes people’s aspirations of owning a home a reality, while emphasizing on supporting green buildings and projects that help society achieve inclusive sustainable development. The objective is to fulfil economic upliftment for EWS/LIG segments of the country. The company has adopted an asset light model by getting into co-lending arrangements that further helps to penetrate and expand in deeper markets of India. To facilitate a seamless customer experience, the entire life cycle of housing loans is technology driven i.e., from origination to closure. The state-of-the-art IT infrastructure helps in reducing costs, real-time analysis of customer data, improving control and underwriting functions, while increasing customer reach and distribution capability. For more information visit iiflhomeloans.com.
📌 About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
📌 UK-IFC Market Accelerator for Green Construction Program
The UK-IFC Market Accelerator for Green Construction Program (MAGC) is the first UK-IFC bilateral partnership in blended concessional finance for climate change mitigation. By accelerating the construction of certified green buildings, the program aims to mobilize $2 billion in investments to help mitigate climate change. The U.K. government’s contribution is used to catalyze construction markets by incentivizing the development of green buildings through certification with IFC’s Excellence in Design for Greater Efficiencies (IFC’s EDGE) and other leading certification systems.