The International Finance Corporation ( IFC ) is investing up to 3 billion rupees ( US$30 million ) in residential mortgage-backed securities ( RMBS ) issued by an Indian affordable housing finance company to boost homeownership among low- and middle-income families across the country.

The RMBS offering, announced on December 18, was issued by Grihum Housing Finance. It is designed to catalyze private capital for affordable mortgage lending while advancing India’s RMBS market.

RMBS instruments are securities backed by pools of retail residential mortgages. They allow housing finance providers to convert loan cash flows into tradable securities, giving them access to market-based, longer-tenor funding, while also enhancing affordability for end-customers and broadening investor participation.

The transaction is IFC’s first investment in RMBS in India, and is aligned with the Government of India’s Pradhan Mantri Awas Yojana ( PMAY ) initiative to ensure housing for all. PMAY is described as a credit-linked government subsidy scheme to facilitate access to affordable housing for India’s low- and moderate-income residents.

The partnership with IFC will enable Grihum to expand responsible and affordable housing finance for first-time homebuyers in low- and middle-income segments, especially in semi-urban and peri-urban areas ( areas immediately adjacent to a city or urban areas ), while also driving job creation. By diversifying Grihum’s long-term funding base and mobilizing additional institutional investors, IFC says the transaction will enable more families to secure affordable home loans.

Supporting government agenda

Grihum chief executive officer Arjun Chowdhry notes that demand for affordable housing in India is growing, with an estimated 275 million people aspiring to improve living conditions. “The [IFC] partnership reinforces our shared mission of expanding affordable homeownership in support of the government’s agenda,” he points out. “The innovative use of capital market instruments, such as RMBS, helps to enhance the efficiency and depth of India’s housing finance ecosystem – thereby enabling more families to realize their dream of owning a home.”

IFC regional division director for South Asia Imad N Fakhoury says IFC’s anchor investment is designed to expand affordable homeownership, especially for first-time buyers in underserved low- and middle-income segments, while building market confidence in India’s RMBS offerings. He explains: “As part of our One World Bank Group engagement in the housing sector, IFC’s programmatic approach focuses on improving access to both housing and housing finance, through affordable, scalable, long-term solutions. This means working together with both developers to provide affordable housing units and with banks/housing finance companies to expand access to credit for home buyers.”

By adopting a replenishing structure, Fakhoury adds, the investment transforms loan cash flows into a more predictable pattern, making it suitable for a wider range of investors and contributing to the development and growth of the RMBS market.

Complementing the government efforts, IFC is collaborating with developers to support the provision of affordable housing units, and with banks and housing finance companies to ensure greater access to credit for mortgages, enabling more families to secure affordable home loans.

Grihum is an affordable housing finance company serving over 85,000 customers through a network of over 200 branches across 18 states and Union Territories. With assets under management of over 90 billion rupees, Grihum is dedicated to enabling homeownership for underserved segments of India’s population.

Guided by its brand ethos, Apna Ghar, Apni Pehchan ( My Home, My Identity ), Grihum focuses on expanding its home loan portfolio and penetrating deeper geographies under its “Go Direct, Go Home” loan strategy. The company’s digital-first approach leverages cutting-edge technologies to enhance customer experiences, ensuring seamless and efficient loan lifecycle management.