MUMBAI: International Finance Corporation (IFC), a member of the World Bank Group, has invested Rs 160 crore or USD 25 million in Mahindra Rural Housing Finance. The company will use the proceeds to give loans to low-income borrowers in villages, a release has said.
Last month, IFC had committed USD 100 million in Mahindra Financial Services to increase loans to farmers for buying tractors, commercial vehicles, and other equipment for modern farming. According to a National Real Estate Development Council estimate, housing shortage will touch 114 million units by 2022, of which 68 million will be in the rural areas.
Mahindra Rural Housing Finance has 85 per cent of its portfolio in rural areas, with an average loan size of only USD 1,200. Its customers include farmers, micro-entrepreneurs, and salaried class in the unorganized sector. “This association with the IFC will help us capitalize on the great growth opportunities in rural housing,” said Ramesh Iyer, vice-chairman of Mahindra Finance, the holding company of Mahindra Rural Housing Finance.
Bridging the housing gap is a strategic priority for IFC and aligned with the World Bank Group’s twin goals of eliminating extreme poverty and increasing shared prosperity. Accordingly, IFC has made available nearly USD 2 billion, including mobilization, towards affordable housing sector in the country. “There is high demand for affordable housing, particularly in rural and semi-urban areas. The supply is beginning to increase. IFC’s investment will send a positive signal to investors, increasing confidence and encouraging potential creditors to provide long-term debt to this sector,” said Arun Kumar Sharma, chief investment officer, IFC.
“Home ownership helps improve living standards and the housing construction industry is a significant employment generator. Both are critical to our mission,” he added. Anuj Mehra, managing director at Mahindra Rural Housing Finance, said the company has extended loans to over seven lakh rural households so far and this investment will be a further boost to its mission to expand and reach out to underserved customers in rural markets. PTI
