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CDC Group backs housing finance for women with INR 360 crores investment in Aavas Financiers Ltd's Social Bond program

Posted On : 2022-03-10 22:24:22( TIMEZONE : IST )

CDC Group, the UK's development finance institution, today announced an INR 360 crores (c. US$50 million) investment in a Social Bond program by Aavas Financiers Ltd ("Aavas"), one of India's leading affordable housing finance companies.

CDC, which will be renamed British International Investment in April, is providing the support to Aavas in form of a gender directed lending facility which will target financing toward women. This will allow Aavas to increase lending to its women customer-base, enabling them to gain greater access to finance which will facilitate ownership of properties by women.

With only 9 per cent of households in India being legally women-owned, access to finance is a key factor that impedes women's ability to own property. Access to housing and ownership of property can have strong positive impact on safety, dignity, improved livelihoods, and better economic outcomes. As such, CDC's latest investment in Aavas will help increase women's access to housing finance to encouraging property ownership, which will in turn boost women's social empowerment, broaden their economic opportunities and promote higher standards of living for families and communities in underserved segments of lower income borrowers, especially in rural and semi-urban areas of India. Additionally, the transaction will address the shortage in affordable housing, which is estimated to reach a shortfall of 100 million units by 2022, predominantly in lower income groups.

The investment will be made in form of Rupee Denominated Bonds (Masala Bonds) and will be listed as a social bond, in alignment with the International Capital Market Association's Social Bond Principles. The proceeds of the bonds will 100 per cent be used to finance the women-owned property loan portfolio, with an aim to address gender inequity in asset ownership, in India. This represents the first social bond for Aavas and for CDC, building on both partners' commitment to scaling inclusive and sustainable impact in India.

Moreover, by directing CDC's investment intentionally and measurable toward improving financial offerings to women, Aavas qualifies under the 2X Challenge - an initiative launched by the development finance institutions (DFIs) of the G7 to mobilise capital to support increased economic empowerment for women in emerging economies. Furthermore, this investment aligns with UN SDG 5, for promoting Gender Equality, and it highlights CDC's gender-smart investing strategy in action.

This facility follows CDC's INR 200 crores (US$ 27 million) commitment to Aavas in 2018, which enabled the company to extend affordable housing loans to low and middle income customers in underserved communities in India. Aavas' track record makes it well-positioned to achieve impact at scale through its reach within these target categories of borrowers in semiurban and rural areas.

Alex Ellis, British High Commissioner to India, said: "I welcome the continued partnership with Aavas to increase access to affordable housing in India. Building better and more economic opportunities for women is one of the UK's top global priorities. Genderdirected British investment in infrastructure will help create positive and long-term benefits for millions of women."

Srini Nagarajan, Managing Director, Head of Asia, at CDC Group, commented: "Property ownership can support better wellbeing, safety and dignity, while also improving economic opportunities and social outcomes. This loan, which deepens our relationship with Aavas and marks a milestone social bond investment for CDC, demonstrates our commitment to direct our long-term capital toward expanding housing access and accelerating social impact across India. Further to this, we are thrilled that our investment will help ensure that women can equally benefit from these development outcomes and play an even more active role in shaping their personal growth and in driving holistic prosperity within their communities.

Bridging the gap in demand and supply of housing in India as well as addressing the gender disparity in property ownership, will help transform the country and accelerate productive and inclusive development over the long term, both locally and across the wider region."

Sushil Kumar Agarwal, Managing Director & Chief Executive Officer at Aavas Financiers Ltd, commented: " Women owned property is important indicator of social and economic growth for any country. Although India has seen substantial improvement in women owned property in past few years due to changes in regulatory and social landscape, there is considerable scope for improvement, particularly in low-income groups, to own property and more importantly further to obtain mortgage loans for their housing and business needs.

Aavas helps address critical gap in access to home loans and MSME loans for people working in informal sector. CDC investment will support to deepen our customer segment by contributing to growth of our women owned property loan book."

Ghanshyam Rawat, Chief Financial Officer at Aavas Financiers Ltd, further commented: "The Social Bond would be a first for Aavas and is one of earliest issuances by an affordable housing finance company in India. With this issue, Aavas aims to diversify its resource base which will also enable us to benchmark our long-term debt instruments globally.

This issuance will support women empowerment especially amongst low-and middle-income, underserved rural and semi-urban areas of India. We would like to thank CDC for their trust and belief in the Company's robust business model."

Shares of Aavas Financiers Limited was last trading in BSE at Rs. 2567.35 as compared to the previous close of Rs. 2565.55. The total number of shares traded during the day was 3026 in over 785 trades.

The stock hit an intraday high of Rs. 2640.00 and intraday low of 2518.05. The net turnover during the day was Rs. 7845708.00.