MUMBAI: To help expand access to climate finance for electric vehicles (EVs) and energy-efficient consumer goods as well as to support women-owned microenterprises and women micro-borrowers, the International Finance Corporation (IFC) has partnered with Bajaj Finance, extending a $400 million loan to the company. This is part of the Pune-based company's $1-billion debt-raising plan.
The funding aims to increase competitiveness in the climate finance market, support the country’s climate goals, and promote financial inclusion, Bajaj Finance said in a statement Wednesday.
IFC’s $400 million loan will enable the company to expand access to finance for customers opting to buy EVs, including two-wheelers, three-wheelers and four-wheelers, apart from strengthening its presence in the energy-efficient consumer goods space. This partnership will also boost the company’s ability to fund and support more women-owned microenterprises and women micro-borrowers, Sandeep Jain, chief financial officer at Bajaj Finance said.
"The IFC funding serves as a catalyst for diversifying our financing sources. With this, our volume of outstanding climate loans stands to increase four times to $600 million in 2027 from over $150 million in 2024," he said.
According to Imad N Fakhoury, the IFC regional director, accelerating climate financing is crucial for India to meet its net-zero goals. IFC’s investment in Bajaj Finance will boost market competition, inspiring other NBFCs and investors to expand their financing for energy-efficient solutions, e-mobility and microfinance.
India is the world’s third-largest energy-consuming nation. As the country rapidly develops its energy sector, millions of households are expected to buy new appliances, air conditioners and vehicles. By 2050, the demand for air conditioners is expected to rise nine-fold, increasing greenhouse-gas emissions significantly. The household appliances market is estimated to be $59.2 billion in 2024 and projected to grow annually at 7.35 percent.
EECG is key to the country’s low carbon growth path, especially with households accounting for 26 percent of overall energy consumption and 25 percent of electricity consumption. The adoption of EECG and financing is limited as only 26 percent of consumer goods requiring a mandatory star rating are rated as 5- or 4-star efficient.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets working in over 100 countries. In fiscal 2024, IFC has committed a record $56 billion to private companies and financial institutions in developing countries.