To help improve and expand access to climate finance for electric vehicles (EVs) and energy efficient consumer goods (EECG) as well as support women-owned microenterprises and women micro-borrowers in India, IFC has partnered with Bajaj Finance Limited (BFL) to invest $400 million out of a $1 billion fundraising exercise by BFL. The funding aims to increase competitiveness in the climate finance market, support the country's climate goals, and promote financial inclusion.
BFL, part of Bajaj Finserv Ltd, and one of India's largest and most diversified Non-Banking Finance Companies (NBFC), has established a significant presence in the EV and EECG space.
IFC's $400 million loan will enable BFL to expand access to finance for customers opting to buy EVs, including 2-wheelers, 3-wheelers and 4-wheelers, and strengthen its presence in the EECG space. This partnership will also boost BFL's ability to fund and support more women-owned microenterprises and women micro-borrowers.
Sandeep Jain, Chief Financial Officer & Chief Operating Officer, Bajaj Finance Ltd., said, "Responsible business practices, driven by our ESG principles, are foundational to how we do business. IFC's funding of $400 million serves as a catalyst for diversifying our financing sources. With this, our volume of outstanding climate loans stands to increase 4x to $600 million in 2027 from over $150 million in 2024. It helps us enable greater usage of EVs and energy-efficient consumer goods, support more women-owned micro-borrowers, and contribute better to India's inclusive and low carbon future."
Imad N. Fakhoury, Regional Director for South Asia, IFC, said, "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. Together with Bajaj Finance, a like-minded partner, we are fully committed to accelerating green growth for the country, while also empowering women and closing the gender gap."
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 in India is further estimated to be $59.19 billion in 2024 and projected to grow annually at 7.35 percent.
Against this backdrop, EECG is key to India's low carbon growth path, especially with households accounting for 26 percent of overall energy consumption and 25 percent of electricity consumption. EECG will help consumers save on electricity bills and support India's goal of cutting emissions intensity by 45 percent by 2030. However, increasing awareness and understanding of EECG is essential. While India has a Bureau of Energy Efficiency-led Star Label program to rate the energy efficiency of consumer goods, the adoption of EECG and financing is limited. Only 26 percent of consumer goods requiring a mandatory star rating (except LED lamps) are rated as 5- or 4-star efficient.
Along with EECG, EVs are key to India's decarbonization efforts transportation accounts for around 12 percent of emissions with the potential to improve accessibility, increase incomes, and create jobs. Although EV adoption has grown, high financing costs and perceived risks remain barriers to its adoption.
Supporting women-owned microenterprises and micro-borrowers is crucial for India's inclusive growth. With microenterprises making up 99 percent of the 63 million MSMEs in India, and most women-owned MSMEs falling into this category, enhancing their access to credit can unlock immense growth potential and drive economic empowerment for women nationwide.
About IFC
IFC a member of the World Bank Group is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2024, IFC committed a record $56 billion to private companies and financial institutions in developing countries, leveraging private sector solutions and mobilizing private capital to create a world free of poverty on a livable planet. For more information, visit www.ifc.org.
About Bajaj Finance Ltd.
Bajaj Finance Ltd. ( BFL', Bajaj Finance', or the Company'), a subsidiary of Bajaj Finserv Ltd., is a deposit-taking Non-Banking Financial Company (NBFC-D) registered with the Reserve Bank of India (RBI) and is classified as an NBFC-Investment and Credit Company (NBFC-ICC). BFL is engaged in the business of lending and acceptance of deposits. The company has a diversified lending portfolio across retail, SMEs, and commercial customers with significant presence in both urban and rural India. It accepts public and corporate deposits and offers a variety of financial services products to its customers. BFL, a thirty-six-year-old enterprise, has now become a leading player in the NBFC sector in India and on a consolidated basis has 92.09 million customers. BFL has the highest domestic credit rating of AAA/Stable for long-term borrowing, A1+ for short-term borrowing, and CRISIL AAA/Stable & [ICRA]AAA(Stable) for its FD program. It has a long-term issuer credit rating of BBB-/Stable and a short-term rating of A-3 by S&P Global ratings. It has a long-term issuer rating of Baa3 with Stable outlook and a short-term rating of P-3 from Moody's Rating.
To know more, visit https://www.bajajfinserv.in
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