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. IFC’s financing package is also aimed at enabling HDFC to on-lend to people ensuring they can afford such housing.
“Given our long-standing partnership, we welcome IFC’s expertise to help strengthen our green affordable housing lending portfolio,” said Renu Sud Karnad, managing director of HDFC. “We are keen to increase our footprint in funding affordable and green housing and are committed toward supporting India’s efforts for a sustainable and green low-carbon economy.”
According to her, this timely investment will help stimulate 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.It is estimated that 275 million people in India, around 22% of the population, do not have access to adequate housing, and the housing shortage in rural areas is twice that of urban areas. As of 2018, the urban housing shortage was 29 million units, increasing by over 54% since 2012. Despite the demand, India’s mortgage market remains significantly under-penetrated, reflecting massive unmet demand for housing finance.
“With a growing need for affordable housing and a largely underpenetrated market, IFC’s investment in HDFC will underscore the fact that lending for affordable housing is viable, catalysing the market segment,” said Hector Gomez Ang, regional director for South Asia at IFC.
According to him, it is crucial that new buildings and houses in the country are designed to be green and energy efficient to ensure sustainable development.
Residential housing accounts for around 24% of India’s electricity consumption. Given its climate commitments under the Paris Agreement and at the COP 27 summit, a green affordable housing sector is key to reducing the country’s greenhouse gas (GHG) emissions through lower household energy consumption and greener construction activities, among others.
Since 2010, IFC has 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.
This year, IFC has 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.
A green building, or sustainable design, is the practice of increasing the efficiency with which buildings and their sites use energy, water, and materials, and of reducing impacts on human health and the environment for the entire lifecycle of a building.