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This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision.
Summary of Project Information (SPI)
Project number 11755
Project nameDewan Housing Finance Corporation Ltd.
SectorPrimary Mortgage Institutions
Environmental categoryFI-1
Date SPI disclosedDecember 30, 2002
Projected board dateJanuary 31, 2003
Previous EventsInvested: November 10, 2003
Signed: June 20, 2003
Approved: March 21, 2003

Project sponsor and major shareholders of project company
The project sponsor is Dewan Housing Finance Corporation Limited, (DHFL, the company), an Indian company incorporated in April 1984. DHFL’s shareholders include the Wadhawan family (45%), public and corporate bodies (28%), banks and mutual funds (4%), Unit Trust of India (14%) and Union Bank of India (9%).

With a network of 41 branches, and assets worth approximately $180 million (as of March 31, 2002), DHFL is the fourth largest housing finance company (HFC) in India.

Total project cost and proposed IFC investment
IFC’s proposed investment is a long-term loan, for IFC’s own account, of up to Rs600 million (approximately $12.5 million equivalent).

IFC investment as approved by Board
12.56 million (USD)
Product LineIFC Investment (million USD)
Risk Management 

Location of project and description of site
DHFL, has its headquarters in Mumbai. Through its branch network, the company is focusing mainly on the semi-urban and rural areas in the Western and Southern states of India.

Description of company and purpose of project
The project is to provide a local currency, long-term loan of up to Rs 600 million to DHFL to fund the expansion of its housing finance operations. The company’s goal is to grow its loan portfolio over the next five years by offering standardized loans to creditworthy individuals in India for purchasing or remodeling their homes. The biggest constraint to achieving this goal is access to long-term funding at reasonable rates. Through its proposed loan, IFC will:
- strengthen DHFL's balance sheet by helping the company meet their funding needs with limited interest rate and maturity mismatches;
- help semi-urban and rural borrowers obtain cost effective home financing; and
- support the expansion of the successful Indian HFC model.

Development Impact
A significant development impact of this project is the extension of housing finance to, and therefore an opportunity of home ownership for, lower-income and semi-urban borrowers, who are currently underserved by lending institutions. Further, through extensive linkage effects, the housing industry will contribute to the development of small and medium enterprises (SMEs) that supply labor and materials for the construction and improvement of homes. Currently, the housing finance sector is a major contributor to economic growth in India. In the case of DHFL, increased home ownership by lower-income borrowers will help boost housing-related industries in the semi-urban regions.

IFC Role
Despite significant improvements in the supply of housing finance, India continues to face serious deficiencies in meeting the housing needs of its rapidly growing urban households. As a result, in the next several decades, India will require massive investments in the housing sector. Some of the major constraints that are limiting the availability of housing finance result from two critical factors: a shortage of strong, credible, and well capitalized players; and a lack of adequate funding, in maturity, structure and volume required for housing finance. IFC will address the first constraint by investing in a second-tier institution with a focus on particular market segments, including underserved semi-urban areas and lower income borrowers. The second constraint, i.e. availability of term financing, is being addressed by making available long-term, local currency funds to appropriately finance DHFL's mortgage assets and improve asset-liability management. Funding of this type is currently unavailable to the company in the local market.

Environmental and social issues - Category FI-1

This is a category C project, which is expected to have minimal or no environmental impact. No further environmental review or action is required.

To contact the project company, please write to:
Mr. Kapil Wadhawan, Managing Director
Dewan Housing Finance Corporation Ltd.
“Madhava” – Ground Floor, Bandra-Kurla Complex, Bandra (E)
Mumbai – 400 051, INDIA
Phone: (91-22) 659-1222
Fax: (91-22) 659-4865

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