37417 - PNBHF Green bond

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Summary of Investment Information

Project Number

37417

Company Name

P N B Housing Finance Limited

Date SPI Disclosed

Nov 22, 2015

Country

India

Region

South Asia

Projected Board Date

Dec 22, 2015

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Apr 30, 2022

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jan 28, 2016
Signed : Mar 16, 2016
Invested : Mar 31, 2016

Sector

Primary Mortgage Institutions

Project Description

The proposed project involves the subscription of Non-Convertible Debentures (NCDs) issued by PNB Housing Finance Limited (“PNB HFL” or “the Company”), an established housing finance company in India. The proceeds from the NCD issuance will be used to finance construction of "green" residential apartments/buildings. The construction standards would be certified by acceptable green building certification standards including EDGE (certification program developed by IFC). The IFC’s EDGE Building program is focused towards scaling up green buildings and has been launched in 100 developing countries. The program leverages IFC’s green buildings investments to initiate a virtuous circle of supply and demand. IFC has invested nearly US$ 1 billion, either directly or via intermediaries, in green buildings in the last three years.

Associated Advisory Engagement

N/A

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Housing Finance

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

1. Green housing Construction: The proposed investment is expected to generate significant environmental and economic benefits through the development of energy efficient housing construction projects. The investment is expected to reduce 1500 MT of GHG emissions per annum and also would help establish a market and an ecosystem for green housing construction in India.
2. Job Creation: The construction industry is one of the largest employers of labor in urban India and provides high potential for employment opportunity to the poor. The proposed investment would, therefore, directly contribute to job creation.

1. Dedicated Credit Line: The investment will provide a dedicated credit line for on-lending to developers of green housing and thereby help develop a dedicated green lending practice within the Company. This would lead to sustained growth of the green loan book as against a one- off endeavor.
2. Demonstration Effect: IFC''s significant investment in the NCDs for green housing will encourage other investors to invest in other similar issuances by the Company and other like-minded HFCs.

E&S Category Rationale / Risks and Mitigation

The company provides retail finance for home loan and non home loan. Home loan finance is for purchase, construction, improvement, or extension of individual residential units, whereas non-home loan finance (also termed as wholesale finance) is for financing business entities through property mortgage, rent securitization and lending to real estate developers for construction finance. Overall, the company exposure to construction finance is around 8% of total loan book. The use of proceeds from IFC subscription of the Non Convertible Debentures (NCDs) will be utilized for onlending to developers of residential units (within the construction finance portfolio). This present potentially limited adverse environmental or social risks or impacts. In rare circumstances, it may include a very limited number of construction finance projects with potentially significant adverse environmental or social risks or impacts. Hence, the overall E&S risk of the proposed investment is considered as medium and the project is categorized as FI-2. The applicable Performance requirements will be i) the IFC- FI Exclusion List; ii) The applicable E&S laws and regulations; and iii) the IFC Performance Standards.

Main E&S risk and impacts includes, i) developer and project compliance with applicable regulations, permits and licenses; ii) construction phase risks and impacts like occupational health & safety, onsite labour and working conditions, contractor compliance, waste and pollution management; and iii) possibly land and biodiversity impacts depending on the nature and location of the project. At present, the company undertakes due-diligence on key environmental clearances, building plan approvals, permits and licenses received by the project and the developer. This is followed by periodic monitoring of the projects. However, this due-diligence and monitoring process is currently not benchmarked to the IFC Performance Standards (IFC PS) requirements. The company will upgrade the current approach and implement E&S review procedures (the Social and Environmental Management System or the SEMS) in line with IFC PS, appoint an E&S officer and provide training to relevant staff to ensure that the SEMS is implemented.

Task Title & Description	Status	Comments	Completion Date
Nominate officers	Completed	signed letter	03/23/2016
Establish SEMS	Completed	Updated procedures received	04/21/2018
Staff Training	Completed	Reported in annual report	09/30/2018

Contacts

For Inquiries About the Project, Contact

Mr. Sanjaya Gupta, Managing Director,
PNB Housing Finance Limited
Email : md@pnbhfl.com

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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