Delhi-based Ummeed Housing Finance, which finances affordable housing in North and Central India, has raised about ₹25 crore ($3.5 million) in a Series A round led by impact investment firm Lok Capital. Duane Park is a co-investor in this round.

Ummeed will use the money to expand its operations and deploy technology to achieve greater operating efficiency, according to a press release.

This is Lok’s first investment from its third fund. Vishal Mehta, co-founder and Partner, Lok Advisory Services, and Anurag Bhargava of Duane Park will join Ummeed’s Board. Alok Prasad, former Mortgage Head at Citi Financials and former CEO of Microfinance Industry Association, will also join as a non-executive Board member at Ummeed.

According to the release, the portfolio of existing affordable housing finance players is about ₹6,500 crore, while the potential of segment is several times that. As banks and large non-banking finance companies focus on the formal, higher-income segment, there is a large opportunity for a start-up like Ummeed to develop a sustainable business model in lending to the informal market.

Ashutosh Sharma, a banker with over 25 years experience in multinational banks, founded Ummeed in January to provide housing finance to families with low, informal income. The company is backed by a team of former Citibank professionals, who have experience in commercial banking, credit and mortgage.

According to the release, Ummeed plans to leverage technology to operate its business on the ground. Its technology team is building a platform for loan origination and management. It is operational in East Delhi, and plans to have 11 branches in North and Central India, targeting 1,500 customers in the next 12 months.

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