NEW DELHI: The International Finance Corporation (IFC) aims to enhance homeownership among low- and middle-income families by investing up to ₹300 crore (approximately USD 30 million) in Residential Mortgage-Backed Securities (RMBS) issued by Grihum Housing Finance, a company specializing in affordable housing finance.
This issuance aims to stimulate private capital for affordable mortgage lending and develop India’s RMBS market, according to a statement released by the IFC, an entity of the World Bank Group, on Friday.
RMBS instruments are securities backed by collections of retail residential mortgages. They enable housing finance providers to transform loan cash flows into tradable securities, allowing access to market-based, long-term funding. This ultimately enhances affordability for customers and broadens investor participation.
This marks IFC’s inaugural investment in RMBS in India, in line with the Indian government’s Pradhan Mantri Awas Yojana initiative, which aims to provide housing for everyone.
“As part of the World Bank Group’s engagement in the housing sector, IFC’s programmatic strategy focuses on improving access to both housing and housing finance through affordable, scalable, long-term solutions. This involves collaborating with developers to provide affordable housing units and with banks and housing finance companies to expand access to credit for homebuyers,” stated IFC Regional Division Director for South Asia, Imad N. Fakhoury.
The investment adopts a replenishing structure that stabilizes loan cash flows, making it appealing to a wider range of investors, thereby fostering the growth of the RMBS market.
This partnership with Grihum aims to generate jobs and create market solutions to mobilize private capital, fortifying the housing finance ecosystem and making homeownership achievable for families nationwide.
In response to IFC’s funding, Grihum Housing Finance CEO Arjun Chowdhry remarked, “This partnership reinforces our joint mission to enhance affordable homeownership in line with the government’s agenda. Utilizing capital market instruments like RMBS improves the housing finance ecosystem’s efficiency and accessibility, enabling more families to realize their homeownership dreams.”
Alongside government efforts, IFC is working with developers to provide affordable housing units and collaborating with banks and housing finance companies to ensure broader access to mortgage credit, thus enabling more families to obtain affordable home loans.
