In a significant move to bolster India’s climate and financial inclusion efforts, the International Finance Corporation (IFC), part of the World Bank Group, has announced a strategic partnership with Bajaj Finance. IFC is financing $400 million as part of Bajaj Finance's $1 billion debt-raising strategy to grow its electric vehicle (EV) fleet, promote energy-efficient consumer goods (EECG), and support women-owned microenterprises. This funding aims to accelerate the country’s transition to a low-carbon future while simultaneously promoting financial inclusion and empowering women entrepreneurs.
The $400 million loan from the IFC will allow Bajaj Finance to considerably expand its financing products, particularly for consumers wishing to acquire electric vehicles such as two-, three-, and four-wheelers. This investment is critical at a time when the global move towards sustainable mobility is gaining traction, and India, as the world's third-largest energy-consuming country, plays an important role in influencing the future of clean energy adoption.
The loan would also help Bajaj Finance expand into the energy-efficient consumer goods industry, where adopting efficient appliances is crucial to lowering home energy consumption, which accounts for 26% of total energy use in India. By expanding EECG financing options, the cooperation tackles an urgent need for more environmentally friendly home items, which is critical to India's road to attaining its ambitious climate goals.
“IFC's $400 million investment serves as a catalyst for diversifying our financing sources,” said Sandeep Jain, CFO & COO of Bajaj Finance. “With this funding, we expect our volume of outstanding climate loans to increase fourfold to $600 million by 2027, from over $150 million in 2024. This will enable greater use of EVs and energy-efficient consumer goods, support women-owned micro-enterprises, and contribute to India’s inclusive and low-carbon future.”
Another pillar of this relationship is its emphasis on women's empowerment. The investment will help Bajaj Finance better support women-owned microenterprises and microborrowers. This program will have a big impact in India, where financial services for women entrepreneurs are often undeveloped, by increasing access to capital for women-owned enterprises and micro-borrowers, thereby helping to bridge the gender gap in finance.
Imad N. Fakhoury, the IFC regional director for South Asia, emphasised the importance of this dual approach: “Accelerating climate financing is crucial for India to meet its net zero goals. IFC’s investment in Bajaj Finance will increase market competition and inspire other non-banking financial companies (NBFCs) and investors to expand their financing for energy-efficient solutions, e-mobility, and microfinance. Together with Bajaj Finance, a like-minded partner, we are fully committed to driving green growth for the country while also empowering women and bridging the gender gap.”
India's energy consumption is likely to rise further, with millions of people planning to buy new gadgets and automobiles as the country's energy industry grows. The household appliances market is expected to reach $59.2 billion by 2024, increasing at a 7.35% annual pace. As a result, greenhouse gas emissions are predicted to climb dramatically, particularly due to increased demand for energy-intensive products such as air conditioners. By 2050, demand for air conditioners is predicted to climb ninefold, putting additional strain on the country's energy resources.
In this context, EECG represents an important potential to reduce emissions and improve energy efficiency. However, adoption remains low, with only 26% of consumer goods requiring a star rating meeting the strictest energy efficiency standards. The partnership between IFC and Bajaj Finance aims to close this gap by making energy-efficient products more accessible to customers while also boosting India's overall low-carbon economic goal.
This collaboration also exemplifies how private-sector financing can help achieve environmental goals. With IFC funding, Bajaj Finance is positioned to strengthen its leadership in the climate finance industry and motivate other financial institutions to follow suit. The alliance creates a more sustainable and inclusive financial ecosystem by encouraging competition and increasing access to green financing alternatives.
The IFC's larger commitment to climate and development is shown in its recent financial initiatives, which include a record $56 billion commitment to private enterprises and financial institutions in developing countries for fiscal year 2024. IFC's strategic investments, such as those in Bajaj Finance, underscore its role as a worldwide leader in fostering sustainable development throughout emerging economies.
The relationship between IFC and Bajaj Finance is more than just a financial transaction; it exemplifies how strategic investments may promote environmental sustainability and social equality. This alliance, which combines climate financing, financial inclusion, and women's empowerment, not only strives to lower India's carbon footprint but also ensures that the advantages of this green transition are widely shared, particularly among marginalised communities.
As the world focuses more on green finance and sustainable growth, collaborations like these provide promise for a future in which economic progress and environmental responsibility coexist. IFC and Bajaj Finance's initiatives to accelerate India's green transformation while empowering women pave the way for a more inclusive, sustainable, and prosperous future.
