IFC Extends Loans to HDFC and HomeFirst to Promote Green Affordable Housing
IFC to help set green housing standards for the two home finance companies
December 26, 2022
International Finance Corporation (IFC), a member of the World Bank Group, has announced loans of $400 million and $33.8 million to HDFC and HomeFirst respectively to improve access to climate-smart affordable homes in India.
While HDFC is India’s largest housing finance company, HomeFirst is a technology-driven affordable housing finance company,
“It is crucial that new buildings and houses in the country are designed to be green and energy efficient to ensure sustainable development for all,” Hector Gomez Ang, Regional Director for South Asia, IFC, said.
The funding will help HDFC focus on its green affordable housing portfolio, with 75% ($300 million) of the proceeds earmarked for this sector. The lending framework will set rigorous standards for green buildings, allowing HDFC to boost a quality green housing pipeline while channeling funds to this segment.
Renu Sud Karnad, Managing Director, HDFC Ltd said, “We are keen to increase our footprint in funding affordable and green housing and are committed to supporting India’s efforts for a sustainable and green, low-carbon economy.”
IFC will support HomeFirst in developing its green housing framework, including technical support for green housing evaluation parameters, operationalizing the certification process, and capacity building on green housing certification, monitoring, and reporting.
HomeFirst said the proceeds would be utilized to provide financing to retail buyers for affordable housing and green affordable housing units. Under the arrangement, IFC will also provide non-financial support in terms of knowledge, innovation, and capacity building through advisory engagement.
Manoj Viswanathan, MD & CEO of HomeFirst, said, “This is a huge vote of confidence for HomeFirst’s business model and its strong risk-management process. We believe this partnership has a strong potential to enhance financial inclusion and Green Housing in India.”
A green building increases the efficiency with which buildings and their sites use energy, water, and materials and reduce impacts on human health and the environment. In its design, construction, and operation, a green building reduces negative impacts on the climate and natural environment.
IFC estimates a $3.1 trillion climate-related investment opportunity for India between the year 2018 and 2030, with green buildings accounting for a major portion of this opportunity at $1.4 trillion.
Since 2010, IFC has extended financing worth $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.
Recently, Rajya Sabha approved the Energy Conservation (Amendment) Bill, 2022, which mandates residential buildings with a connected load of 100 kW and above should meet a portion of their energy requirements from renewable sources.
Under this context, a team of researchers from the National Renewable Energy Laboratory (NREL) and the University of Wisconsin, Stout, have recently found that by combining PV with high thermal performance window tech, new buildings can become crucial in combatting climate change by becoming 40% more energy efficient.