The Asian Development Bank (ADB) and Vastu Housing Finance Corporation Limited (Vastu) have signed a senior secured loan agreement worth up to $70 million, aimed at expanding access to affordable and sustainable housing loans in underserved states across India. The funds will target economically weaker sections (EWS) and low-income groups, with a particular emphasis on female borrowers and first-time loan applicants. At least 15% of the funding will be reserved for individuals accessing housing loans for the first time.
ADB’s Private Sector Operations Department Director General Suzanne Gaboury emphasized the initiative’s role in addressing India’s housing deficit while promoting environmentally sustainable and climate-resilient housing. "This partnership with Vastu demonstrates ADB's commitment to financial inclusion and sustainable development in India, aligning with the national financial inclusion strategy," Gaboury said.
India’s housing shortage remains critical, with the Reserve Bank of India identifying a shortfall of 45 million houses for economically weaker sections and 50 million for low-income groups, comprising 95% of the total housing deficit. These groups often face challenges in obtaining credit due to high interest rates, lack of collateral, and limited credit histories.
This collaboration seeks to address these challenges by offering accessible financing options for underserved populations, particularly in rural and semi-urban areas where the credit gap is most pronounced.
Sandeep Menon, Founder, MD & CEO of Vastu, highlighted the initiative’s focus on financial empowerment. "Vastu is committed to expanding access to affordable housing finance for credit-underserved communities, especially women borrowers. Through this partnership with ADB, we aim to bridge the credit gap and support India’s emerging middle-class and lower-income households," Menon said.
ADB’s funding underscores the importance of prioritizing female borrowers to promote gender equality and financial empowerment in rural and peri-urban communities. This approach supports broader development goals, including reducing inequalities and fostering community resilience.
Vastu, a technology-focused affordable housing finance company, specializes in serving self-employed customers in peri-urban and rural areas. The company provides affordable housing loans and loans against property while emphasizing sustainability and financial inclusion. Leveraging its strong presence in semi-urban and rural regions, Vastu plans to utilize ADB’s financing to scale its operations and deepen its impact.
By targeting underserved communities and promoting environmentally sustainable housing, this partnership aims to catalyze economic growth and social development in India’s lower-income and rural areas. It also aligns with global climate goals by encouraging the adoption of climate-resilient housing solutions.
The initiative reinforces ADB’s broader mission of supporting inclusive economic growth and sustainable development across Asia. As housing remains a critical need in India, partnerships like this could pave the way for further investments in affordable, climate-resilient housing for underserved populations.
By fostering financial inclusion and prioritizing women and first-time borrowers, the ADB-Vastu partnership is expected to have a transformative impact on India’s housing sector, promoting economic equity and community resilience.
