OREANDA-NEWS. The Asian Development Bank (ADB) has disbursed a 7-year $150 million loan to PNB Housing Finance Limited, which will support purchases of badly needed affordable housing units across the country.

The company, the fifth largest housing finance company in India, will extend the funds to buyers of low cost homes. Affordable housing is a key factor in raising standards of living and supporting poverty reduction.

“ADB’s assistance provides a source of longer term finance not readily available from banks, which will allow PNB Housing Finance to scale up its activities in the underserved low cost housing sector,” said Christine Engstrom, Director of ADB’s Private Sector Financial Institutions Division. “ADB’s support can also act as a catalyst and encourage other private sector financiers to enter or expand their presence in this market.”

India suffers from an acute shortage of decent, affordable homes with government estimates in 2012 putting the housing shortage at close to 60 million, including 18.8 million in urban areas. This has forced large numbers of lower income people to live in cramped, substandard, often rented accommodation, with limited access to basic amenities. The situation is particularly bad in large fast growing cities, but there is a widespread need across tier-II and tier-III cities as well.

The government has made affordable homes one of its key development priorities and is looking to work closely with the private sector to help finance new housing stock targeted at the moderate to lower income sector.