New Delhi: To boost home ownership among low- and middle-income families, IFC has decided to invest up to Rs 300 crore (around USD 30 million) in Residential Mortgage-Backed Securities (RMBS) issued by
Grihum Housing Finance, an affordable housing finance company. The issuance is designed to catalyse private capital for affordable mortgage lending while advancing India's RMBS market, IFC, a World Bank Group entity, said in a statement on Friday.
RMBS instruments are securities backed by pools of retail residential mortgages. They allow housing finance providers to convert loan cash flows into tradable securities, giving them access to market-based, longer-tenor funding, while also enhancing affordability for end-customers and broadening investor participation. This is IFC's first investment in RMBS in India, aligned with the Government of India's Pradhan Mantri Awas Yojana initiative to ensure housing for all, it said.
"As part of the World Bank Group engagement in the housing sector, IFC's programmatic approach focuses on improving access to both housing and housing finance, through affordable, scalable, long-term solutions. This means working together with both developers to provide affordable housing units and with banks/housing finance companies to expand access to credit for home buyers," IFC Regional Division Director for South Asia Imad N Fakhoury said.
By adopting a replenishing structure, the investment transforms loan cash flows into a more predictable pattern, making it suitable for a wider range of investors and contributing to the development and growth of the RMBS market, he said. This partnership with Grihum aims to create jobs and market solutions that mobilise private capital and strengthen the housing finance ecosystem to make home ownership a reality for families across the country, he added.
Commenting on IFC funding, Grihum Housing Finance CEO Arjun Chowdhry said, "The partnership reinforces our shared mission of expanding affordable home ownership in support of the government's agenda. The innovative use of capital market instruments, such as RMBS's, helps to enhance the efficiency and depth of the housing finance ecosystem, thereby enabling more families to realise their dream."
Complementing government efforts, IFC is collaborating with developers to support the provision of affordable housing units, and banks and housing finance companies (HFCs) to ensure greater access to credit for mortgages, enabling more families to secure affordable home loans, it added.
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