The International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution, has partnered with Axis Bank, one of India’s leading private sector banks, to provide a $500 million loan to foster the development of a blue finance market and boost the financing of green projects in India.
This marks the IFC’s first blue finance investment in India and the country’s first blue transaction by a financial institution. Blue loans are specialized financial instruments that allocate funds for initiatives such as water and wastewater management, reducing marine plastic pollution, restoring marine ecosystems, promoting sustainable shipping, eco-friendly tourism, and offshore renewable energy projects.
Additionally, this deal represents IFC’s largest green finance transaction in India, supporting Axis Bank in expanding its climate finance portfolio. With rapid urbanisation and economic growth, India faces significant opportunities to enhance water and energy efficiency. The water and wastewater treatment market, valued at $1.6 billion in 2022, is projected to reach $3 billion by 2029. Furthermore, the green building sector offers a $1.4 trillion investment opportunity by 2030, driven by the demand for sustainable infrastructure, much of which will rely on private sector investments to complement limited public funding.
Speaking on the occasion, Amitabh Chaudhry, Managing Director and Chief Executive Officer of Axis Bank said, “With the increasing effects of climate change into the global ecosystem and the growing awareness of environment 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 strengthening standards and lending practices to boost sustainable finance in India. Given Axis Bank’s focus on growing its climate and sustainable finance portfolios, along with its large size, systemic importance, and wide reach, we hope to be a strong and stable partner for IFC in the key focus area of climate finance in India.”
“We are thrilled to announce our inaugural blue loan in India, marking our largest climate finance initiative in the country to date. India serves as an exceptional testing ground for innovative approaches to climate adaptation. 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. Additionally, it aims to enhance financing for climate projects across India, with a strong emphasis on green buildings that will mitigate climate change impacts and generate jobs. Partnering with Axis Bank, a like-minded ally, we are committed to propelling India’s sustainable and inclusive growth forward,” said Makhtar Diop, Managing Director of IFC.
Axis Bank is one of the first Indian banks to adopt a board-approved Environmental, Social, and Governance (ESG) lending policy aligned with IFC’s Performance Standards. As part of its advisory role, IFC will support Axis Bank in expanding its green buildings portfolio, including affordable housing, and building capacity for impact reporting. IFC will also provide a performance-based incentive of up to $2.9 million from the UK-IFC Market Accelerator for Green Construction (MAGC) program, which supports the design and construction of green buildings certified by IFC’s EDGE (Excellence in Design for Greater Efficiencies) standard.