IFC Collaborates with Bajaj Finance to Support Climate Finance for Electric Vehicles, EEKG and Women Empowerment in India

The International Finance Corporation (IFC) has invested $400 million in Bajaj Finance Limited to expand climate finance for electric vehicles (EVs), energy-efficient consumer goods (EECG) and support support for women-owned micro-businesses in India ( BFL). This investment forms part of BFL’s $1 billion fundraising target and underlines a mutual commitment to advancing climate goals and promoting financial inclusion.

BFL, a subsidiary of Bajaj Finserv Ltd, India’s leading non-banking finance company, has made inroads in the EV and EEKG markets, aiming to support India’s transition towards sustainable development. The IFC loan will enable BFL to expand financing options to customers purchasing electric vehicles, including two-wheeler, three-wheeler and four-wheeler electric vehicles, thereby contributing to the wider adoption of clean transport alternatives. Additionally, the partnership will empower BFL to finance and facilitate more women-owned micro-enterprises and support female micro-borrowers, thereby advancing the country’s inclusive growth agenda.

BFL’s Chief Financial Officer and Chief Operating Officer, Sandeep Jain, highlighted the importance of IFC’s financing as a milestone in the company’s sustainability journey. “Responsible business practices, guided by our ESG principles, underpin the way we do business. IFC’s $400 million investment is a catalyst, helping us diversify our financing sources and quadruple our climate loan portfolio to $600 million by 2027,” Jain said. he said. “This partnership will increase access to electric vehicles, promote energy-efficient consumer goods, and provide critical support to women-owned businesses, aligned with India’s inclusion and low-carbon development goals.”

The collaboration with IFC is timely as India, the world’s third largest energy consumer, is expected to see a significant increase in demand for electric vehicles and energy-efficient home appliances in the coming decades. The home appliance market in India is expected to reach $59.19 billion by 2024, with an annual growth rate of 7.35 percent. EECGs will play a central role in India’s low-carbon development by reducing energy consumption, with the potential to reduce emissions from households, which currently contribute to 25 percent of the country’s electricity consumption. Although India’s Energy Efficiency Bureau manages a Star Label program to rate the efficiency of appliances, widespread adoption of EEKG is yet to be achieved.

Increasing consumer awareness on EECG adoption is crucial for India to achieve its climate goals. The current adoption rate of high-efficiency devices remains low; Only 26 percent of products in mandatory categories are rated 4 or 5 stars. By improving financing options and awareness, IFC and BFL aim to increase the adoption of energy efficient products in Indian households, helping reduce carbon emissions and save on electricity costs.

In addition to climate-focused products, the partnership highlights that electric vehicles are a key sector in decarbonizing India; transportation, in particular, contributes about 12 percent of the country’s total emissions. By supporting affordable financing for electric vehicles, BFL and IFC aim to reduce high upfront costs and minimize perceptions of risk, i.e. the barriers that currently hinder the widespread adoption of electric vehicles.

The collaboration also highlights financial support for women-owned microbusinesses and microborrowers, a critical component of India’s inclusive economic growth. Women-owned microenterprises represent a significant portion of India’s 63 million micro, small and medium enterprises (MSMEs). Expanding access to credit for these businesses is expected to increase income opportunities for women entrepreneurs and contribute to economic resilience in local communities.

Imad N. Fakhoury, IFC Regional Director for South Asia, underlined the importance of this partnership in meeting India’s climate goals while promoting social equity. “IFC’s investment in Bajaj Finance supports the competitiveness of the market by demonstrating how climate finance can accelerate the transition towards energy efficient solutions and e-mobility,” said Fakhoury. “Together, we are committed to green growth, empowering women and contributing to India’s journey towards a sustainable, inclusive future.”

This initiative between IFC and BFL reflects a growing trend among financial institutions to direct capital towards climate-smart initiatives, particularly those that advance women and underserved groups. As India strives to achieve its goal of net zero emissions by 2070, this partnership signals a proactive approach to sustainable development that combines environmental and social goals to create long-lasting impact.