The International Finance Corporation (IFC), an international financial institution and part of the World Bank Group, has invested $126 million in India’s Federal Bank. The equity investment was made by IFC, along with two investment funds managed by IFC Asset Management Company – IFC Financial Institutions Growth Fund and IFC Emerging Asia Fund, for a 4.99 per cent stake in the Kerala-based Federal Bank.
The infusion of capital will boost Federal Bank’s commitment to Environment Social and Governance standards and strengthen its Tier 1 capital adequacy ratio. It will also assist in the expansion of its micro, small, and medium-sized enterprises and climate finance portfolios. The green equity investment is expected to increase the Federal Bank’s climate lending and facilitate increased green portfolio financing for climate friendly projects associated to energy, renewable energy, smart agriculture, green buildings and waste management.
India requires significant investment to meet its climate commitments to reduce greenhouse gas emissions by 2030 and building a climate resilient future. IFC estimates a total climate-smart investment opportunity of $3 trillion in India till the year 2030. The investment in Federal Bank is in line with IFC’s vision to build back better, with key focus on an inclusive recovery through creation of jobs and greater access of funds to small businesses. This will support green growth and accelerate India’s economic recovery in the wake of Covid-19.