World Bank arm invests ₹916 cr in Federal Bank

LAST MONTH, THE BOARD OF FEDERAL BANK HAD APPROVED THE ALLOTMENT OF 4.99% SHARES TO IFC

NEW DELHI: 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 and medium-sized enterprises (MSME) and climate finance portfolios—key for growth opportunities as the country recovers from the pandemic, the statement said.

“After the bank’s board approved the issuance of shares to the IFC group to an extent of 4.99% of the bank’s paid-up capital, IFC has become a significant shareholder of the bank. The infusion of quality capital further strengthens tier 1 and overall CAR of the bank,” Shyam Srinivasan, managing director & chief executive officer of Federal Bank said.

Federal Bank is expecting to grow and strengthen its ESG portfolio, with increased green portfolio financing for projects, including energy efficiency, and renewable energy.