The Asian Development Bank (ADB) and Aavas Financiers have signed a financing agreement for US dollar (USD) 108 mn to support affordable housing and lending to micro, small and medium enterprises (MSMEs). The facility is intended to expand affordable home finance and to increase credit flow to small businesses that supply and serve low income households. The arrangement is framed as part of broader efforts to strengthen housing finance markets and improve access to formal credit.

The financing will enable Aavas Financiers to scale up lending to low income borrowers and to extend tenure and product options tailored to housing needs. The funds are expected to be deployed across urban and semi-urban markets where demand for affordable housing remains significant. Aavas will channel the proceeds through its lending operations while maintaining standards for risk management and consumer protection.

Aavas Financiers is a housing finance company focused on affordable housing and related financial services, and the transaction is expected to bolster its capacity to reach underserved segments. The ADB has prioritised financial inclusion and housing affordability in its regional programme and will provide technical support to promote responsible lending. The partnership aims to foster sustainable credit growth and to mobilise additional financing from local and international investors.

Stakeholders see the deal as timely given persistent housing shortages and the need to formalise credit to small enterprises that form part of housing supply chains. By expanding access to formal finance the transaction is likely to support job creation, housing construction and improved livelihoods among low income groups. Observers expect the initiative to complement government efforts to enhance affordable housing and access to credit.