IFC Partners with Axis Bank for India’s First Blue Loan

The International Finance Corporation (IFC), which is part of the World Bank Group and focuses on private sector lending, has partnered with Axis Bank to provide a loan of $500 million (around ₹4,200 crore) aimed at developing a blue finance market and increasing funding for green projects in India.

This marks the IFC’s first blue investment in India and the first blue financing deal made by a financial institution in the country. Blue loans are special funding tools designed to support investments in water and wastewater management, reduce ocean plastic pollution, restore marine ecosystems, promote sustainable shipping, eco-friendly tourism, and offshore renewable energy projects.

This deal is also the largest green financing deal by IFC in India. The funding will help Axis Bank grow its climate finance portfolio.

With India’s rapid urbanisation and economic growth, there are significant opportunities to improve water and energy efficiency. The market for water and wastewater treatment was valued at $1.6 billion in 2022 and is likely to grow to $3 billion by 2029.

Moreover, the green building sector offers an investment potential of $1.4 trillion by 2030, driven by the demand for sustainable infrastructure. Most of these investments will need to come from the private sector to make up for the limited public funding available.

This loan will help attract private sector investment in this new asset class and channel long-term funding to support a sustainable blue economy, he explained.

Axis Bank Managing Director and CEO Amitabh Chaudhry said, As climate change increasingly impacts the global ecosystem and awareness of environmental sustainability grows, it’s essential for banks to adopt sustainable lending practices. With Axis Bank’s focus on expanding its climate and sustainable finance portfolios, combined with its size and reach, we aim to be a strong partner for IFC in climate finance in India.

The bank is committed to supporting India’s climate agenda with a public promise to provide an additional ₹60,000 crore (around $7.2 billion) in financing for ESG-aligned sectors by 2030 (as of August 2021). Of this, ₹30,000 crore (about $3.1 billion) was achieved by March 2024.

Axis Bank has been a leader in issuing sustainable financial instruments among Indian banks. It issued the first green US dollar bond in 2016 and the first sustainable US dollar AT1 bond from India in 2021.

The bank stated that, with its history of pioneering sustainable financing, it will use IFC’s funding to promote resource-efficient growth, create jobs, protect vital clean water resources, and support the country’s climate goals.

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