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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.