World Bank to lend $100 mn for low-cost housing in India

The World Bank will extend a $100-million loan for sustainable housing in India that can be used to purchase, build or upgrade low-cost dwellings, the finance ministry said on Thursday.

The state-run National Housing Bank will execute this project.

"Financing under the project aims to create incentives for lenders to focus on lower-income households through a net reduction of the lenders' cost of funds of approximately 200-300 basis points," the ministry said.

"The project also aims to deliver on its stated objective of reaching a higher proportion of lower income households while maintaining portfolio quality standards."

As per official estimates, there is a shortage of around 25 million low-cost dwelling units in India. Funding is a major problem as these projects are often charged interest rates 200-300 basis points higher than normal.