HDFC secures $400 mn IFC loan for financing ‘green’ affordable housing units

Subject: International relations

Context:

The International Finance Corporation (IFC) has extended a $400-million loan to mortgage major HDFC for financing green affordable housing units, as part of their efforts towards supporting climate goals.

Details:

It will help close the urban housing gap and improve access to climate-smart affordable homes by boosting green housing.

Need for green affordable housing units:

It is estimated that 275 million people in the country, or 22% of the over 1.4 billion population, do not have access to adequate housing, and the rural housing shortage is twice that of urban areas.
As of 2018, the urban housing shortage was 29 million units, increasing by over 54% since 2012.
Residential housing accounts for around 24% of the country’s electricity consumption.
According to climate commitments under the Paris agreement and at the climate change conference COP-27 at Sharm el-Sheikh, the green affordable housing sector is key to reducing greenhouse gas emissions through lower household energy consumption and greener construction activities, among others.

Green concepts and techniques in the affordable housing sector can help address the following:

KUTUMB: An initiative for Green and affordable housing:

Initiative of IILF home finance limited.
It is a platform to blend the benefits of green homes within the affordable housing segment in India.
Kutumb focuses on the needs, efforts and initiatives that can be taken to promote sustainable and energy efficient real estate development in cost effective ways.
It has partnered with Asian Development Bank ADB, International Finance Corporation IFC, CDC- a UK sovereign fund, Indian Green Building Council IGBC, among others.

The five development institutions under the World Bank Group are:

About the International Finance Corporation (IFC):

The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset management services to encourage private sector development in developing countries.
It is a member of the World Bank Group and is headquartered in Washington, D.C., United States.
It was established in 1956 as the private sector arm of the World Bank Group to advance economic development by investing in strictly for-profit and commercial projects that purport to reduce poverty and promote development.
The IFC is owned and governed by its member countries, but has its own executive leadership and staff that conduct its normal business operations.
It is a corporation whose shareholders are member governments that provide paid-in capital and which have the right to vote on its matters.

Functions:

It offers an array of debt and equity financing services and helps companies face their risk exposures, while refraining from participating in a management capacity.
The corporation also offers advice to companies on making decisions, evaluating their impact on the environment and society, and being responsible.
It advises governments on building infrastructure and partnerships to further support private sector development.