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International Finance Corporation (IFC) stake in Federal Bank

  • IAS NEXT, Lucknow
  • 19, Oct 2021
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IFC stake in Federal Bank Ltd has resulted in no new coal commitment.

What’s the issue?

  • The international body had demanded in July 2021 that India’s 7th largest commercial bank should put a stop to coal financing.
  • The bank is a key lender to firms such as Jindal Steel Works (JSW) Energy Ltd and Adani Power Rajasthan Ltd.

This is expected to impact India’s energy production.

About the International Finance Corporation (IFC):

  • It is an international financial institution that offers investment, advisory, and asset management services to encourage private sector development in developing countries.
  • It is a member of the World Bank Group and is headquartered in Washington, D.C., United States.
  • It was established in 1956 as the private sector arm of the World Bank Group to advance economic development by investing in strictly for-profit and commercial projects that purport to reduce poverty and promote development.
  • The IFC is owned and governed by its member countries, but has its own executive leadership and staff that conduct its normal business operations.
  • It is a corporation whose shareholders are member governments that provide paid-in capital and which have the right to vote on its matters.

Roles and functions:

  1. Since 2009, the IFC has focused on a set of development goals that its projects are expected to target. Its goals are to increase sustainable agriculture opportunities, improve healthcare and education, increase access to financing for microfinance and business clients, advance infrastructure, help small businesses grow revenues, and invest in climate health.
  2. It offers an array of debt and equity financing services and helps companies face their risk exposures while refraining from participating in a management capacity.
  3. It advises governments on building infrastructure and partnerships to further support private sector development.