The Asian Development Bank (ADB) and Erode, Tamil Nadu-based Vastu Housing Finance Corporation Ltd (Vastu) have entered into a senior secured loan agreement of up to $70 million to enhance access to affordable and sustainable housing loans in the underserved States. This financing will be utilised to provide loans to economically weaker sections and low-income groups, with an emphasis on female borrowers. At least 15 per cent of the funds will be allocated to first-time borrowers, says a release.

“ADB aims to address the critical housing shortage in India while promoting environmentally friendly housing that enhances climate resilience for homeowners by focusing on lower-income households and sustainable housing,” said PSOD Director General Suzanne Gaboury. “This partnership with Vastu illustrates ADB’s commitment to supporting financial inclusion and sustainable development in India, in alignment with the country’s national financial inclusion strategy.”

According to the Reserve Bank of India, shortfalls of 45 million houses for economically weaker communities and 50 million for low-income groups account for 95 per cent of overall housing deficit. These groups often struggle to access credit due to high mortgage costs and limited credit history. This highlights the necessity for affordable housing finance companies that provide loans to new borrowers and self-employed individuals in rural and semi-urban areas.

Vastu describes itself as a technology-driven affordable housing finance company that focuses on self-employed customers. With a strong presence in semi-urban and rural areas, Vastu offers affordable housing loans and loans against property, emphasising sustainability and financial inclusion, the release said.