India’s non-banking financial company (NBFC) Bajaj Finance has raised US$1 billion to help improve and expand access to climate finance for electric vehicles (EVs) and energy-efficient consumer goods (EECGs), as well as support women-owned micro-enterprises and women micro-borrowers in the country.

The financing, announced on November 6, aims to boost the competitiveness in the climate finance market, support India’s climate goals, and promote financial inclusion. The International Finance Corporation (IFC) is supporting the fund raising by investing US$400 million in the facility. The IFC investment will enable Bajaj Finance to expand access to finance for customers opting to buy EVs, including two-wheelers, three-wheelers and four-wheelers, and strengthen its presence in the EECG space. The partnership will also enhance the company’s ability to finance and support more women-owned micro-enterprises and women micro-borrowers.

Bajaj Finance CFO and COO Sandeep Jain says the IFC funding serves as a catalyst for diversifying the company’s financing sources. “With this, our volume of outstanding climate loans stands to increase 4x to US$600 million in 2027 from over US$150 million in 2024,” he says. “It helps us enable greater usage of EVs and EECGs, support more women-owned micro-borrowers, and contribute better to India’s inclusive and low-carbon future.”

IFC regional director for South Asia Imad N. Fakhoury adds: “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. 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, according to IFC. 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 US$59.19 billion in 2024 and projected to grow annually at 7.35%.

Against this backdrop, EECG is key to India’s low-carbon growth path, IFC points out, especially with households accounting for 26% of overall energy consumption and 25% of electricity consumption. EECG will help consumers save on electricity bills and support India’s goal of cutting emissions intensity by 45% by 2030.

However, increasing awareness and understanding of EECG is essential, adds IFC. While India has a Bureau of Energy Efficiency-led Star Label programme to rate the energy efficiency of consumer goods, EECG adoption and financing are limited. Only 26% 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% 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 micro-enterprises and micro-borrowers is crucial for India’s inclusive growth. With micro-enterprises making up 99% of the 63 million micro, small and medium-sized enterprises (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.

Bajaj Finance, part of Bajaj Finserv, 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. It has now become a leading player in the NBFC sector in India, and on a consolidated basis has 92.09 million customers.