MICROCAPITAL BRIEF: India's PNB Housing Finance Borrows $50m from International Finance Corporation (IFC) for Mortgages for Low-Income Families

PNB Housing Finance Limited (“PNB Housing”), a subsidiary of the India-based, government-controlled Punjab National Bank (PNB), recently accepted a loan of USD 50 million from the International Finance Corporation (IFC), the private-investment arm of the US-based World Bank Group.With help from IFC, PNB Housing also obtained further loans worth a total of USD 50 million from other unspecified investors. As part of the relationship, IFC intends to provide unspecified aid to PNB Housing in entering the energy-efficient housing sub-sector. India has an estimated shortage of 58.8 million housing units, almost all of which consists of demand from low-income households.

PNB Housing plans to allocate approximately 35 percent of this USD 100 million to provide home loans to women. A further 35 percent will be allocated to bolster PNB Housing’s presence in the states of Chhattisgarh, Jharkhand, Madhya Pradesh Odisha, Rajasthan and Uttar Pradesh. The goals of the investment include offering housing finance outside of major cities and encouraging other companies to become more involved in the affordable housing sphere, according to a statement by Sanjaya Gupta, the Managing Director of PNB Housing.

PNB Housing’s total assets stand at INR 117.27 billion (USD 1.99 billion) as of 2014. PNB reported total assets of INR 4.8 trillion (USD 77.79 billion) as of 2013.

By Ananya Tiwari, Research Associate

About PNB Housing Finance (PNB Housing)

PNB Housing Finance is a subsidiary of Punjab National Bank (PNB), which is owned by the government of India. According to its 2013-14 Annual Report, PNB Housing has an outstanding loan book of INR 105.9 billion (USD 1.72 billion) and profit after tax of INR 1.27 billion (USD 20.7 million). Gross non-performing assets are at 0.32 percent and net non-performing assets are 0.16 percent of outstanding loans as of March 31, 2014 The company’s total assets stand at INR 117.27 billion (USD 1.99 billion), and its return on asset (RoA) is 1.39 percent as of financial year ending in 2013.

About International Finance Corporation (IFC)

The International Finance Corporation (IFC) is a US-based multilateral development bank and member of the World Bank Group. It offers loans, equity investments, advisory and risk mitigation services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. IFC has 184 member countries and reported total assets of USD 77.5 billion as of fiscal year-end 2013.

Sources and Additional Resources

[1] The Hindu Business Line, http://www.thehindubusinessline.com/industry-and-economy/banking/ifc-pnb-housing-to-lend-100-m-for-home-loans-to-women-selfemployed/article6422585.ece

[2] PNB Housing Finance Limited 26th Annual Report 2013-14, http://www.pnbhfl.com/pdf/PNBHFL-final-AR.pdf

MicroCapital, September 20, 2014, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-acquires-minority-stake-in-brazilian-insurer-austral-participacoes-for-36m-to-support-sectors-such-as-agriculture/

MicroCapital, August 27, 2014, https://www.microcapital.org/microcapital-brief-japanese-sumitomo-mitsui-banking-corporation-smbc-announces-purchase-of-110m-equity-stake-in-cambodian-acleda-bank-from-international-finance-corporation-ifc/

MicroCapital, August 27, 2014, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-announces-1m-in-advisory-services-to-airtel-zambia-to-strengthen-financial-inclusion/

MicroCapital, October 28, 2009, https://www.microcapital.org/microcapitalorg-story-bandhan-india-receives-32m-loan-from-pnb/

MicroCapital Universe Profile: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

MicroCapital Universe Profile: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Punjab+National+Bank