New Delhi, India, December 2, 2020—An endeavor to address a critical gap in affordable green housing in India will benefit scores of low-income borrowers, including women. It will further help boost green housing business opportunities and scale green housing finance, thereby supporting an enabling environment for green buildings and the Government of India's national 'Housing for All' program.
IFC, a member of the World Bank Group, has signed an agreement with Aavas Financiers Ltd—a retail, affordable housing finance company—and Aavas Foundation. The project will help improve access to affordable green housing for low-income borrowers who have little or no access to finance
The project is also being supported by the UK-IFC Market Accelerator for Green Construction (MAGC) Program, a partnership between IFC and the Government of the United Kingdom, which aims to catalyze financing for certified green construction and green mortgages to mobilize investments that help tackle climate change.
"I am confident that this program will help banks, financial institutions, and all other stockholders to promote Green Building initiatives of IFC," said Sushil Kumar Agarwal, CEO and Managing Director of Aavas Financiers Ltd.
Around 600 million Indians are expected to live in urban areas by 2030 according to the United Nations. Women comprise 70 per cent of the internal migration (2011 Census of India). Against this backdrop, green buildings can save more than 20 percent on energy and water consumption compared to typical buildings, saving homeowners an average of 15-20 percent on utility bills.
In India, IFC estimates a residential green housing investment opportunity of $1.25 trillion from 2018 to 2030. However, there is still no scalable and replicable business case for financial institutions to offer a home loan product for beneficiary-led construction of green homes in the affordable segment. In response, this project leverages the cross-functional capabilities within IFC to help Aavas operationalize IFC's green building rating and certification system, EDGE (Excellence in Design for Greater Efficiencies).
The main barriers to women's access to housing finance are insufficient income and traditional gender norms according to an IFC report, Her Home – Housing Finance for Women. The government's Credit Linked Subsidy Scheme provides a subsidized interest rate on housing loans if a woman will hold the title to the new property. While this brings more women into the housing finance market, it is only able to reach a small portion of the potential female borrowers. Thus, a gap remains.
"The foundation envisions this program to be a major breakthrough in revolutionizing green housing finance in India and Asia. This will ultimately help in mobilizing masses to shift to a more sustainable and resource-efficient lifestyle," said Ghanshyam Rawat, trustee of Aavas Foundation.
This project will help Aavas to conduct an exercise to establish a baseline for its women portfolio and develop business projections for providing affordable green housing finance to women in low-income communities.
"Through this project, IFC aims to increase the scale of green construction and mortgage finance—especially in the LIS (Low Income States) of India—by helping Aavas develop a strategy and business plan to effectively target the lower-income segment, including women borrowers," said Jun Zhang, Country Head–India at IFC. He added, "It will further help create a replication impact by allowing financial institutions in other emerging markets develop customized, strategic responses to promote affordable green housing in their countries."
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In the fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
About EDGE
An innovation of IFC, EDGE helps property developers to build and brand green in a fast, easy, and affordable way. EDGE is an online platform, a green building standard, and a certification system for more than 170 countries. To date, EDGE-certified commercial and residential projects across the world keep nearly 270,000 tons of carbon dioxide annually from entering the atmosphere. For more information, visit www.edgebuildings.com
About Aavas Financiers Limited
Aavas Financiers Limited (formerly known as Au Housing Finance Limited), incorporated in 2011 in Jaipur is a retail, affordable housing finance company, primarily serving low and middle-income self-employed customers in semi-urban and rural areas in India. The company provides affordable home loans in the un-served market and a majority of its customers have limited access to formal banking credit. Aavas uses a unique appraisal methodology to assess its customers so that individualized financial solutions could be worked out. The mission and vision of Aavas is to enrich lives of people by enabling them to achieve their dream of owning a home.
About Aavas Foundation
Founded in 2019, Aavas Foundation is a not-for-profit organization dedicated to fulfillment of corporate social responsibility commitments of Aavas Financiers Ltd. Community engagement remains at the core of the Foundation's activities, through which it seeks to empower and nurture socio-economically weaker sections in India. It undertakes various skill development, health, education, and environment conservation initiatives and programs under its broad motto, "Engage, Enable, Enrich."
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