South Asia

IFC Client Extends Record Level of Mortgages to India’s Poor in First Year

March 9, 2012 -- Aadhar, a joint venture created in 2011 between IFC and Dewan Housing Finance Corp., extended more than 1,100 home loans to India’s poorest, making the company the first institution of its kind to offer mortgages on a large scale to the underserved.

Aadhar is expanding access to finance and creating jobs as India’s demand for housing increases. In only one year, the company achieved its objective of setting up 15 branches in six states to offer home loans to customers in India’s low-income segment. The project demonstrates that this demographic can be a profitable target segment for mortgages, and that loans can also be rolled out on a large sale.

Before the creation Aadhar, residents in the states such as Uttar Pradesh, Orissa, and Madhya Pradesh had very little access to home loans or other financial services. Most providers of home loans to low-income earners – if they exist at all -- operate on a very small scale.

The IFC project targets customers with household incomes of up to 20,000 rupees a month, or about $400. In its first year of operation, the company processed 1,800 loans from more than 3,300 applications, adding about three new customers a day.

"IFC’s investment helped mobilize Dewan, a major financial provider in India, to expand into this important segment,’’ James Scriven, Director of Financial Markets, said. "In addition to ensuring access for more affordable homes and job creation, this transaction also highlights our partnership with strategically important clients such as Dewan.”

More than one billion people around the globe live in inadequate housing, according to the World Bank. In South Asia, which is home to one out of every four people on the planet, 14 percent of the population has either no home or lives in urban slums and squatter settlements.

As of 2011, IFC has committed almost $2 billion in mortgage and housing finance with an outstanding portfolio of nearly $1 billion. More than 15 Advisory Services projects are active globally, with particular focus in Eastern Europe, Central Asia, Africa, Latin America and South Asia.