The International Finance Corporation (IFC) and two investment funds managed by IFC Asset Management Company — IFC Financial Institutions Growth Fund, LP and IFC Emerging Asia Fund, LP — have made an equity investment of $126 million (Rs 916 crore) for a 4.99% stake in India’s Federal Bank Limited (FBL).
The investment will help the private sector lender grow and strengthen its environmental, social, and governance (ESG) portfolio, with increased green portfolio financing for projects including energy efficiency, renewable energy, climate-smart agriculture, green buildings, and waste management, per a press statement.
It will also support FBL in strengthening its tier 1 capital adequacy ratio (CAR) and expanding its micro, small, and medium-sized enterprises (MSME) and climate finance portfolios.
“This move is in line with IFC’s strategy to support green growth by spurring investments to build better and greener, seizing the opportunities to help India meet its climate goals and build a greener, resilient future,” said Roshika Singh, Acting Country Manager for IFC in India.
“The investment is also expected to create tens of thousands of jobs, with micro, small and medium-sized enterprises gaining access to much-needed financing, which will also help ensure an inclusive recovery.”
According to the statement, India ranks third globally in terms of greenhouse gas (GHG) emissions, with the country needing substantial investments to meet its goals under the Paris Agreement to reduce GHG emissions by 2030. IFC, a World Bank institution, estimates a total climate-smart investment opportunity of $3 trillion in India till the year 2030.