A new project aimed at addressing a critical gap in affordable green housing finance for low income borrowers, including women, in India has been launched.
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 to help improve access to green housing for those who have little or no access to finance.
The project is expected to help boost green housing business opportunities and scale green housing finance in India and support the government’s national ‘Housing for All’ programme.
Around 600 million Indians are expected to live in urban areas by 2030, according to the UN, with women comprising of 70% of the internal migration, statistics from the 2011 Census of India reveal.
Against this backdrop, green buildings can help save more than 20% on energy and water consumption compared to typical buildings, saving homeowners an average of 15% to 20% on utility bills.
IFC estimates a residential green housing investment opportunity of $1.25 trillion (£0.9tn) from 2018 to 2030 in India.
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.
The project is also being supported by the UK-IFC Market Accelerator for Green Construction (MAGC) Programme, a partnership between IFC and the UK Government, which aims to catalyse financing for certified green construction and green mortgages to mobilise investments that help tackle climate change.
Jun Zhang, Country Head–India at IFC said: “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.
“It will further help create a replication impact by allowing financial institutions in other emerging markets develop customised, strategic responses to promote affordable green housing in their countries.”