Given that the residential sector takes 29 percent of electricity consumption, India is making efforts to promote more sustainable projects in the sector through green financing. While India has a large proportion of middle-income and high net-worth individuals, the housing finance market is highly under-penetrated and lags behind in the ‘green’ residential buildings segment, a segment that is still at the nascent stage of development.
To fill the urban housing gap, a series of improvements in design and construction of residential housing can be done in a sustainable manner. The burgeoning demand to construct green residential buildings and facilitate development of affordable housing have empowered IFC, a member of the World Bank Group, to invest as much as INR 2 billion ($75.8 million) in green bonds issued by Punjab National Bank Housing Finance Ltd. (PNBHFL).
As the fifth largest housing finance company in India, PNBHFL will use the funds to finance residential projects that are recognized for their green building standards such as EDGE (Excellence in Design for Greater Efficiencies), a certification program developed by the IFC. PHBHFL’s green bond will be the first issuance for green buildings in the country and IFC will be the sole investor. By developing energy-efficient housing construction projects, India is able to support the country’s demand for housing loans in urban areas.
According to Sanjaya Gupta, Managing Director of PNB Housing Finance, IFC’s global experience in green housing promotion coupled with their dedicated “green” buildings team and EDGE certification will provide significant support for PNBHFL to develop more green residential projects. Through the investment, the company is able to develop its green loan portfolio that is committed to green lending practices and sustained growth.