IFC, a member of the World Bank Group, India’s National Housing Bank, and the Rajasthan state government are coming together in a unique public-private partnership to establish a new housing finance company in the state of Rajasthan that will provide home loans to low-income households.
IFC’s own stake and mobilization through stakeholders such as National Housing Bank, government of Rajasthan, and private sector players, will help establish the company with an initial capital of $22 million. The exact shareholding structure is currently under discussion. The new company will focus on providing affordable housing finance options to low- and middle-income households that have limited or no access to formal financial services.
More than 14 percent of South Asians have no home or live in inadequate housing such as urban slums and squatter settlements, according to World Bank estimates. While the region’s housing and housing finance markets are dynamic, they are limited in their outreach, catering primarily to upper-income groups.
“Involvement of multiple stakeholders and the ability to build successful public-private partnerships is crucial to developing an ecosystem that will improve accessibility of housing finance and affordable housing. We will support the company through equity, training, and refinancing,” said R. V. Verma, Chairman and Managing Director, National Housing Bank.
Of the total shortage of about 25 million affordable housing units in India, 98 percent constitutes demand from economically stressed and low-income households. The government’s National Urban Housing and Habitat Policy recognizes that public sector resources alone cannot meet this high demand.
IFC Regional Director for South Asia, Tom Davenport, said, “There is a huge unmet need for housing finance in India. Addressing this need is a strategic priority for IFC. Access to housing and affordable home financing plays a critical role in creating jobs, enhancing incomes for the less privileged, strengthening financial markets, and triggering sustainable and inclusive growth.”