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India signs up for low income housing project

Aug 16, 2013

India and the World Bank signed a $ 100 million project to finance low income housing projects in the country.

The Indian government recently signed Loan and Project Agreements for World Bank (IDA) assistance of about US $100 million for a low income housing finance project.

The agreement was signed between the National Housing Bank(NHB) and the World Bank yesterday.

The Loan Agreement was signed by Nilaya Mitash, Joint Secretary, Department of Economic Affairs, Ministry of Finance on behalf of the Government of India and Michael Haney, Operations Advisor of World Bank (India) on behalf of the World Bank. The project agreement was signed by R.V. Verma, Chairman and Managing Director (CMD) on behalf of the National Housing Bank (NHB). Representative(s) from NHB and officials from the Finance Ministry and World Bank, among others, were present.

The objective of the project is to provide access to sustainable housing finance for low income households, to purchase, build or upgrade their dwellings.

The project will have three components; which will include financial support for sustainable and affordable housing to enable the NHB to refinance low income housing loans. The loan money will also be used for capacity building of the National Housing Bank (NHB), Qualified Intermediary Institutions, and Qualified Primary Lending Institutions (QPLIs).

The project is also looking at creating incentives for lenders to focus on lower income households through a net all-in reduction of the lenders’ cost of funds.

The World Bank and the government of India have initiated the project to help India in reaching and creating a higher proportion of lower income households while maintaining quality standards. The project expects to develop prudent lending standards to serve the more vulnerable, lower income households, expand the coverage of credit bureaus to include informal income borrowers and also pilot new policies and products to overcome the challenges of dwelling informality.

The project is expected to be implemented within a five year time frame.

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