SBI Affordable Housing (AFH)

completed

The State Bank of India (SBI) will receive a subsidized loan to refinance final loans to poorer Indian population groups for the construction, purchase or renovation of housing or credit lines to financial institutions that offer housing financing specifically for poorer population groups. By providing refinancing funds in the lower income segment, the aim is to improve needs-based, efficient and sustainable access to financing for affordable housing and thus contribute to improving the living conditions of poorer sections of the population in India. The borrowers are members of low income groups. 80% of the financing volume is to be used in the segment with monthly incomes of up to 50,000 INR (approx. 670 EUR) and 20% in the segment with monthly incomes of up to 20,000 INR (approx. 340 EUR). Due to their work in the informal sector, partly irregular income streams and lack of collateral, the target group has difficulty obtaining loans for housing financing from commercial banks, as financing for this population group has so far only been provided to a very limited extent in the Indian banking system. Increasing SBI's refinancing capacity means both a quantitative and qualitative improvement in the loan offer in this market segment. The project is intended to help close the financing gap that exists here. The Indian government is addressing the financing bottleneck in the housing sector through the Housing for All by 2022 program. As part of this initiative, the national government, together with the federal states, plans to build 110 million additional homes by 2022. This goal is to be achieved through various subsidy components in social housing for the poorest sections of the population with an annual household income of less than 8,000 euros. One component of the program provides for the granting of low-interest credit lines by financial institutions (such as SBI) to the households affected. The subsidy is distributed by the National Housing Bank (NHB) and the Housing and Urban Development Corporation (HUDCO) to the financial institutions and the loan amount of the individual borrowers is reduced accordingly. This will further improve access to affordable housing for these sections of the population. Apartments built as part of this program will be registered either in the name of the woman who heads the family or in the name of the married couple. Indian banks will play a key role in implementing the ambitious plans. SBI is the ideal partner for this project due to its extensive branch network and its presence in rural areas of India, as it has direct access to the target group.