IDLC seeks $40m from IFC to offer home loans

IDLC Finance Ltd is seeking $40 million in loans from the International Finance Corporation to make house financing affordable for low and medium income groups in Bangladesh.

The non-bank financial institution will use the proceeds to support purchase, construction and extension of houses of such individuals.

The project, which awaits the IFC board's approval, will be supported by the local currency facility of the IDA18 IFC-MIGA private sector window, created by the World Bank Group to catalyse private sector investment in International Development Association's member countries.

As part of the IDA18 replenishment, the Group created the $2.5 billion IDA18 IFC-MIGA.

The local currency facility will help strengthen the housing market by supporting longer-term local currency lending and will contribute to make homeownership more affordable thanks to the extension of mortgage loans maturities, according to the IFC's project information portal.

“If the proposed financing goes through, it will enable us to extend home loans to middle and lower middle income population of the country, currently an underserved segment,” said Arif Khan, CEO of IDLC Finance.

The financing will also pave the way for a viable affordable housing finance product, Khan said.

IDLC is the largest non-bank financial institution in Bangladesh and has a substantial SME portfolio.

As of December 2017, the company held $1.2 billion in assets and about 20 percent of its loan portfolio was dedicated to housing finance.

Home ownership level in Bangladesh is about 30 percent, whereas it is up to 80 percent in developed countries, according to industry people.

Property prices in Dhaka are more than 10 times the annual income of an average person, whereas the international measure of affordability is about four times the annual income.