News Column

PNB HFL project

June 7, 2014

Project number : 35226 Region : South Asia Country : India Company name : PNB HFL Sector: O-EA - Primary Mortgage Institutions Date SPI disclosed: May 27, 2014 Project Description: The proposed project would involve a senior loan of up to US$50 million to PNB Housing Finance Ltd. ( PNB HFL ). PNB HFL is targeting expansion of its affordable housing finance portfolio and has obtained RBI approval for a US$100 External Commercial Borrowings ( ECB ). The project is intended to support PNB HFL in increasing its reach in the affordable housing finance segments with additional focus on the low income states of India, women borrowers and for offering mortgage financing for green residential units. This will be PNB HFL s second debt raising in the foreign currency debt market. The proposed investment is consistent with the World Bank Group s India Country Promotion Strategy (CPS) as it aligns with the engagement areas of (i) Inclusion by improving access to affordable housing finance and enhancing investment in the low income states (ii) Transformation through job creation by supporting the labor intensive affordable housing segment and (iii) Integration giving increased access to financial services in Tier II and Tier III cities. Expected Development Impact : 1) Increased access to finance access for Low and Middle Income Segments: These segments are characterized by low ticket sizes and not an area of focus for majority of banks and housing finance companies. PNB HFL is one of the few large HFCs which provides housing finance to the self employed and women clients. The Company is also committed to further expand its business in the low income states of India. 2) Job Creation: Building affordable homes will increase construction activity which has positive linkage impacts on employment and growth. 3) Green Mortgages: The company also proposes to develop, in consultation with IFC, suitably designed mortgage products which could finance "green" residential buildings. IFC%s Expected Role and Additionality : 1) Demonstration Effect: IFC%s investment would demonstrate the viability of offering housing finance to LMI client. While housing finance is one of the lowest risk asset classes in India%s financial sector, mainstream commercial institutions have so far shown limited in this segment. PNB HFL proposes to increase its presence in Tier II and Tier III cities thereby reinforcing the validity of low income housing finance as a viable business. 2) Access to competitive and diverse funding source: PNB HFL is well capitalized. However, it is dependent on bank borrowings and NCDs for >70% of its funding needs. Funding fom IFC will diversify the funding profile of the company. IFC will also support the company in its efforts to explore overseas markets and investors, which is an important element in the company%s growth strategy. Environmental & Social Categorization Rationale : The lending profile of PNBHFL is focused (65%)

Project completion date : 2015-05-27 12:00:00


Address : 9th Floor, Antriksh Bhavan, 22 Kasturba Gandhi Marg, New Delhi 110001 Attn: Mr. Sanjaya Gupta, Managing Director,

Country :India

Financier : International Finance Corporation (IFC),

Financier address : International Finance Corporation (IFC) 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA Tel: (202) 473-3800 Fax: (202) 974-4384

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Source: TendersInfo (India)

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