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L. Joseph
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COLOMBO, SRI LANKA, October 6, 1999 — The International Finance Corporation will become an equity partner, together with Housing Development Finance Corporation of India (HDFC) and the National Development Bank of Sri Lanka (NDB), in the first market-based private housing finance institution focused exclusively on housing finance in Sri Lanka. The recently established NDB Housing Finance Company (NDB Housing) will provide long-term mortgage loans and other new mortgage products in Sri Lanka.
HDFC, which pioneered housing finance in India and is the market leader, will provide technical assistance. HDFC's investment of 15 percent in the equity of NDB Housing reflects its support for the development of formal housing finance in the region.
There is substantial unmet demand for housing finance in Sri Lanka, with total annual demand estimated at about Rs.27 billion (US$380 million), of which about 25 percent is serviced by financial institutions. The proposed project will address the housing finance needs of the middle class. By aligning with a strong technical partner, NDB Housing will introduce best industry practices and provide a model for others to emulate. The housing construction industry is expected to respond by building smaller, more affordable units. Housing is an employment-intensive sector and this project will create many jobs.
Housing and the infrastructure required to support adequate living conditions are among the urgent problems facing Asian cities today, said Mr. Assaad Jabre, Vice President for Portfolio Management & Advisory Operations who signed for IFC. This investment will help to address the pressing need for housing in Sri Lanka.
Mr. Deepak Satwalekar, Managing Director, signed on behalf of HDFC, and Mr. Ranjit Fernando, General Manager and Director, for NDB.
IFC will make an equity investment of about $1.3 million for 15 percent of NDB Housing's share capital. IFC, which has been investing in Sri Lanka since the early 1970s, opened an office in Colombo in October 1998 to focus on growing investment opportunities in Sri Lanka in areas such as infrastructure, health and financial markets.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.