New Delhi, India, April 14, 2016
—IFC, a member of the World Bank Group, has invested INR 5 billion ($75.8 million) in green bonds issued by Punjab National Bank Housing Finance Ltd. (PNBHFL) to help construct green residential buildings, facilitate development of affordable housing, and create more jobs in India.
PNBHFL, India’s fifth largest housing finance company, will use the funds to finance residential projects based on recognized green building standards, including EDGE (Excellence in Design for Greater Efficiencies, a certification program developed by the IFC). This will generate environmental and economic benefits through the development of energy-efficient housing construction projects and support the country’s demand for housing units and housing loans in urban areas. PNBHFL’s green bond is the first issuance designated to green buildings in India and IFC is the sole investor.
Sanjaya Gupta, Managing Director, PNB Housing Finance, said, “IFC’s global experience in promoting green housing, its dedicated “green’ buildings team, and proprietary certification platform, EDGE, will provide significant support for us to develop more green projects.” This investment will help the company develop a committed green lending practice and sustained growth of its green loan portfolio.
The housing finance market in India is highly under-penetrated and caters largely to middle-income and high net-worth individuals. The country lags behind in the ‘green’ residential building segment, which is still in a very early stage of development. With the residential sector accounting for 29 percent of electricity consumption, improvement in design and construction of residential housing can reduce emissions and fill the urban housing gap in a sustainable manner.
“IFC is committed to developing a sustainable housing finance market through investments that build confidence in affordable housing and green finance,” said Jun Zhang, IFC’s India Country Head. “This project is one of a series of transactions through which IFC is introducing the green-building concept in the affordable housing space, while promoting our housing-for-all and climate agendas,” he added.
IFC is one of the world’s largest financiers of climate-smart projects in developing countries. In 2015, IFC launched the EDGE green building certification system in India to boost eco-friendly construction and make buildings more resource-efficient. IFC has invested in Dewan Housing Finance Ltd. and Aadhar Housing Finance Pvt. Ltd. to help expand their affordable housing portfolios in low-income states. IFC has also invested in Value and Budget Housing Corporation Pvt. Ltd. and affordable housing platforms set up by Tata Housing Development Corporation Ltd. and Shapoorji Pallonji Company Pvt. Ltd.
The investment was made possible by IFC’s landmark Masala Bond program, which allows IFC to raise rupee financing from offshore markets for Indian private sector projects.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence, to create opportunity where it’s needed most. In FY15, our long-term investments in developing countries rose to nearly $18 billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity.
India is IFC's top country exposure, globally. IFC's committed portfolio in India is over $5 billion as of June 30, 2015. In FY15, IFC committed $1.4 billion in new investments. In addition to strengthening local capital markets in India, IFC is focused on boosting financing in infrastructure and logistics, promoting financial inclusion, helping create conditions to attract increased private capital, and helping structure public-private partnerships.