CDC Group invests Rs 360 crore in Social Bond program of Aavas Financiers

CDC Group, the UK's development finance institution, has announced a Rs 360 crore (around US$ 50 million) investment in a Social Bond program by Aavas Financiers Ltd., one of India's leading affordable housing finance companies.

The investment will be made in the form of Rupee Denominated Bonds (Masala Bonds) and will be listed as a social bond, in alignment with the International Capital Market Association's Social Bond Principles.

The proceeds of the bonds will 100 percent be used to finance the women-owned property loan portfolio to address gender inequity in asset ownership, in India. This represents the first social bond for Aavas and CDC, building on both partners' commitment to scaling inclusive and sustainable impact in India.

CDC, which will be renamed British International Investment in April, is providing support to Aavas in the form of a gender directed lending facility that will be financing toward women. This will allow Aavas to increase lending to its women's customer base, enabling them to gain greater access to finance which will facilitate ownership of properties by women.

This facility follows CDC's Rs 200 crores (US$ 27 million) commitment to Aavas in 2018, which enabled the company to extend affordable housing loans to low- and middle-income customers in underserved communities in India. Aavas' track record makes it well-positioned to achieve impact at scale through its reach within these target categories of borrowers in semi urban and rural areas.

Currently, only 9 percent of households in India are legally women-owned, access to finance is a key factor that impedes women's ability to own property.

Access to housing and ownership of property can have a strong positive impact on safety, dignity, improved livelihoods, and better economic outcomes. As such, CDC's latest investment in Aavas will help increase women's access to housing finance to encourage property ownership, which will, in turn, boost women's social empowerment, broaden their economic opportunities and promote higher standards of living for families and communities in underserved segments of lower-income borrowers, especially in rural and semi-urban areas of India.

Additionally, the transaction will address the shortage in affordable housing, which is estimated to reach a shortfall of 100 million units by 2022, predominantly in lower-income groups.

Moreover, by directing CDC's investment intentionally and measurable toward improving financial offerings to women, Aavas qualifies under the 2X Challenge – an initiative launched by the development finance institutions (DFIs) of the G7 to mobilise capital to support increased economic empowerment for women in emerging economies. Furthermore, this investment aligns with UN SDG 5, for promoting Gender Equality, and it highlights CDC's gender-smart investing strategy in action.