The International Finance Corporation (IFC) is partnering with Axis Bank to provide a $500 million loan to help develop a blue finance market and scale up financing of green projects in India.
This is IFC’s first blue investment in India and the first blue transaction by a financial institution in the country. Blue loans are financing instruments that raise and earmark funds for investments such as water and wastewater management, reduction of marine plastic pollution, restoration of marine ecosystems, sustainable shipping, eco-friendly tourism, and offshore renewable energy.
The funding will enable Axis Bank to expand its climate finance portfolio.
“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,” said Amitabh Chaudhry, Managing Director and Chief Executive Officer of Axis Bank. “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.”
India’s water and wastewater treatment market size was estimated at $1.6 billion as of 2022 and is expected to reach $3 billion by 2029. Additionally, the green buildings sector presents an investment opportunity of $1.4 trillion by 2030, driven by a need for sustainable infrastructure. Most of these investments need to come from the private sector to offset limited public funding.
“India serves as an exceptional testing ground for innovative approaches to climate adaptation,” said Makhtar Diop, Managing Director of IFCIFC — a member of the World Bank Group. “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 is among the first banks in India to have a board-approved Environmental, Social and Governance (ESG) policy for lending that adheres to IFC Performance Standards. The Bank has made a public commitment of incremental financing of Rs 60,000 crores (approximately $7.2 billion) in ESG-aligned sectors by 2030 (from August 2021), of which Rs 30,000 crores (approximately $3.1 billion) of incremental financing was achieved by March 2024.
