The International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, has partnered with Axis Bank to provide a USD 500 million (approximately Rs 4,200 crore) loan to help develop a blue finance market and scale up the financing of green projects in India. This marks IFC's first-ever blue investment in India and the first blue transaction carried out by a financial institution in the country.
Blue loans are financial instruments designated for projects aimed at sustainable water management, marine ecosystem restoration, waste water management, reduction of marine plastic pollution, sustainable shipping, eco-friendly tourism, and offshore renewable energy. This initiative also represents IFC's largest investment in green financing in India, according to the organization's statement. The funding will allow Axis Bank to expand its climate finance portfolio, particularly in areas related to blue and green initiatives.
With India's rapid urbanization and economic growth, there are ample opportunities to enhance water and energy efficiency. The country's water and wastewater treatment market was valued at USD 1.6 billion in 2022 and is projected to grow to USD 3 billion by 2029. Additionally, the green building sector in India is expected to see an investment opportunity of USD 1.4 trillion by 2030, as sustainable infrastructure becomes a priority. Much of this funding is anticipated to come from the private sector due to limited public resources.
IFC Managing Director Makhtar Diop expressed enthusiasm for the blue loan initiative, highlighting its role in catalyzing private sector investments and promoting a sustainable blue economy in India. He emphasized that India offers a unique environment to test innovative climate adaptation strategies. Similarly, Amitabh Chaudhry, Managing Director and CEO of Axis Bank emphasized the need for banks to adopt sustainable lending practices in light of the increasing impact of climate change on global ecosystems and the growing awareness of environmental sustainability.
