India: HDFC Line of Credit for Affordable Housing

OBJECTIVE

The project objective is to increase access to affordable housing to households in India by providing long term financing support.

DESCRIPTION

The Project is supported by a line of credit to Housing Development Finance Corporation Limited (HDFC) to finance (i) the acquisition/construction of individual affordable housing units and (ii) sub-projects comprising multiple affordable housing units. At least 25% of the aggregate amount of sub-loans must be allocated to Green Affordable Housing Loan.

ENVIRONMENTAL AND SOCIAL INFORMATION

AIIB’s Environmental and Social Policy (ESP), including the Environmental and Social Exclusion List (ESEL), applies to this Project. The Project has been placed in Category FI and is expected to have limited adverse environmental and social (ES) impacts which are reversible and successfully managed using known good practice measures.

The loan to HDFC will be used only for on-lending to individuals and to private developers for the development, construction, or acquisition of low-cost affordable housing sub-projects in urban and semi-urban areas. HDFC individual on-lending is expected to be in the form of mortgage loans to individuals; no land acquisition or physical or economic displacement is expected under these individual housing loans, as they are expected to be provided to individuals who have purchased the property with a mortgage or are voluntarily making improvements to their dwellings.

On-lending to private developers will require screening and ES risk assessment of sub-projects, in accordance with HDFC’s Environmental and Social Management System (ESMS), described below.

As a result of its long-standing involvement with multilateral development banks, including IFC and ADB, HDFC’s ESMS is integrated into its appraisal process and will be applied to its on-lending to developers under the Project. The ESMS includes a section on Exclusion Criteria and outlines the process for screening, conducting due diligence, and monitoring the environmental and social (ES) risks and impacts of the activities to be financed. HDFC will apply AIIB’s Environmental and Social Exclusion List (ESEL) to the Project and will exclude from the Project certain high risk activities, including Category A activities and activities involving: (i) significant involuntary resettlement (e.g., slum upgrade rehabilitation); (ii) risk of adverse impacts on Indigenous Peoples; (iii) significant risks to or impact on the environment, community health and safety, biodiversity, or cultural heritage; or (iv) significant occupational health and safety risks. Any activities requiring the preparation of a Resettlement Plan will require prior review of AIIB until HDFC demonstrates to AIIB’s satisfaction that it has adequate capacity to assess and review risks and impacts arising from involuntary resettlement activities. In addition, HDFC requires its borrowers to comply with applicable national laws and regulations.

HDFC’s ES management system for the Project, as well as its capacity to identify, assess, manage and monitor ES risks and impacts are appropriate for the activities to be financed under the Project.

HDFC has an existing complaints management system open to all its stakeholders which can be accessed via its website, email and social media. It also has a management information system which analyzes the complaints to provide feedback relating to possible process and policy improvements. HDFC will monitor and report on AIIB-financed portfolio annually. AIIB will supervise HDFC activities on a regular basis, including site visits to selected affordable housing sub-projects as needed.