World Bank arm invests ₹916 cr in Federal Bank

World Bank arm IFC has become a significant shareholder in the private sector Federal Bank after picking up nearly 5% stake for ₹916 crore, and the fund will be utilised for climatefriendly projects, among others.

Last month, the board of the Federal Bank had approved to allot 104,846,394 equity shares, equivalent to 4.99%, at ₹87.39 each to IFC, IFC Financial Institutions Growth Fund, LP (FIG) and IFC Emerging Asia Fund, LP (EAF).

Increased financing for climate-friendly projects as well as more financing for small businesses to help accelerate India’s economic recovery from Covid-19 are expected in the wake of a $126 million (₹916 crore) equity investment in the bank, IFC and Federal Bank said in a joint release on Thursday.

The investment will also support FBL’S (Federal Bank Ltd) commitment to environmental, social and governance (ESG) standards while strengthening its tier 1 capital adequacy ratio (CAR).

With this, the bank will expand its micro, small medium-sized enterpr (MSME) and climate fina portfolios—key for gro opportunities as the cou recovers from the pandemic statement said.

“After the bank’s bo approved the issuance of sh to the IFC group to an exte 4.99% of the bank’s paid-up tal, IFC has become a signifi shareholder of the bank. infusion of quality capital ther strengthens tier 1 and o all CAR of the bank,” Sh Srinivasan, managing direct chief executive officer of Fed Bank said.

Federal Bank is expectin grow and strengthen its portfolio, with increased g portfolio financing for proj including energy efficiency, renewable energy.