Kerala-based private sector lender, Federal Bank, has announced its plans to stop financing thermal power projects by 2030, as part of its efforts to decarbonize. The bank's strategy includes reducing its exposure to the thermal power sector by half by 2025 and increasing its investments in the green power sector from Rs 5,083 crore to over Rs 13,000 crore.
The bank's assets total Rs 1.96 lakh crore, which include home loan and Loan Against Property (LAP) books worth Rs 35,000 crore and a gold loan book of Rs 22,000 crore. Despite fluctuations in the exchange rate affecting remittances, Federal Bank managed to channel 21% of India's total remittances of USD 107 billion last year through its platforms. The bank is projecting inflows of over USD 100 billion this year.
Further strengthening the bank's financial position is an investment from the International Finance Corporation (IFC) amounting to Rs 980 crore, which has been approved by the Reserve Bank of India (RBI). In addition to this, a successful Qualified Institutional Placement (QIP) issue has generated Rs 3,000 crore for the bank. These financial boosts are expected to support Federal Bank's transition away from thermal power projects towards more sustainable energy investments.
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