Synopsis: The International Finance Corporation (IFC) has partnered with Axis Bank to provide a $500 million blue loan, marking IFC's first blue investment in India. This loan will finance eco-friendly projects, such as water management, marine pollution reduction, and offshore renewable energy, helping India build a sustainable blue economy.
In a major development for sustainable finance, the International Finance Corporation (IFC), a member of the World Bank Group, has joined hands with Axis Bank to provide a $500 million blue loan.
This partnership marks IFC’s first blue investment in India and the first blue transaction by any financial institution in the country.
Blue loans are innovative financing instruments specifically aimed at promoting investments in water and wastewater management, reduction of marine plastic pollution, restoration of marine ecosystems, sustainable shipping, eco-friendly tourism, and offshore renewable energy.
Axis Bank, one of India’s leading private sector banks, will utilize this funding to expand its climate finance portfolio and support green projects across the country.
The collaboration with IFC aligns with India’s growing commitment to sustainable development, particularly in sectors where private sector involvement is essential to bridge the gap in public funding.
According to an official press release, this $500 million blue loan is also the largest green financing deal by IFC in India.
With the nation experiencing rapid urbanization and economic expansion, there are significant opportunities for improving water and energy efficiency.
The water and wastewater treatment market alone is projected to grow from $1.6 billion in 2022 to $3 billion by 2029.
Additionally, the green buildings sector presents an investment potential of $1.4 trillion by 2030, as sustainable infrastructure becomes a top priority.
Amitabh Chaudhry, Managing Director and CEO of Axis Bank, highlighted the importance of sustainable lending practices in the current global climate.
"With the increasing effects of climate change on the global ecosystem and growing awareness of environmental sustainability, it's imperative for banks to adopt sustainable lending practices. We are excited to partner with IFC, with whom we share a common vision of boosting sustainable finance in India."
The partnership aims to catalyze private sector investment in climate projects, especially in the emerging blue economy.
It also focuses on financing projects related to green buildings, which are crucial for reducing climate change impacts and creating jobs.
This collaboration is expected to propel India toward sustainable and inclusive growth.
Makhtar Diop, Managing Director of IFC, emphasized that this loan would help foster a sustainable blue economy in India while enhancing climate financing for various projects.
“This loan will not only catalyze private sector investment in this emerging asset class but also direct long-term funding toward fostering a sustainable blue economy.”
Axis Bank has long been committed to supporting India’s climate agenda.
The bank’s board-approved Environmental, Social, and Governance (ESG) policy aligns with IFC Performance Standards, ensuring the adoption of sustainable practices in its lending operations.
By March 2024, Axis Bank had already achieved Rs. 30,000 crore (approximately $3.1 billion) in incremental financing in ESG-aligned sectors, with a public commitment of reaching Rs. 60,000 crore (around $7.2 billion) by 2030.
In addition to the financing, IFC will also assist Axis Bank in expanding its green buildings portfolio, particularly for affordable housing projects.
As part of its advisory services, IFC will provide up to $2.9 million in incentives from the UK-IFC Market Accelerator for Green Construction (MAGC) program to promote the design and construction of green buildings certified by IFC’s EDGE (Excellence in Design for Greater Efficiencies) standards.
Since 2020, IFC has been a key player in the global green finance market, providing over $1.9 billion in blue loans and bonds to private institutions worldwide.
This partnership with Axis Bank is expected to lay the groundwork for scaling blue finance in India, helping the country transition toward a sustainable and climate-resilient economy.
In conclusion, IFC’s partnership with Axis Bank to provide India’s first $500 million blue loan marks a milestone in the country's sustainable finance journey.
By focusing on climate-related projects and the blue economy, this initiative will promote environmental sustainability while also creating opportunities for economic growth.
With Axis Bank’s strong ESG framework and IFC’s global experience, this collaboration will likely set the stage for further investments in India’s green and blue finance sectors, fostering long-term development and stability.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
