IFC has been investing $1.3-1.5 billion annually in India post-Covid and could increase it to $2.5-3 billion annually, Puliti told ET in an interview.
“Not only would I like to invest more in India, but to accompany the Indian companies in global expansion,” he said.
India’s financial system is strong and can withstand pressure from the developments outside, Puliti said.
“We want to continue to invest and finance the Indian ecosystem, which is among the more innovative,” he said. “I’m certainly attracted to fintechs…the country has fantastic entrepreneurs.”
India is the largest recipient of IFC investments, accounting for over 10% of the organisation’s long-term commitments across the globe.
Besides fintech and municipal finance, IFC puts a significant focus on climate financing and green investments, Puliti said. He said the development institution is committed to deliver an annual average of 35% of financing for climate from 2021 to 2025, and is already in excess. In FY22, climate finance accounted for 15% of IFC’s total commitments, as per its report.
“We are really pushing a lot on climate financing – green bonds, social bonds, blue bonds, gender bonds, (and) sustainability-linked bonds,” he said, noting that the focus was on capturing the entire ESG universe.
Puliti said the IFC was in a continuous and close dialogue on scaling climate finance with the Indian government. He believes more issuances will provide depth and transparency to the market as the definition of green and mechanisms of monitoring and enforceability will become clearer.
While acknowledging that “greenwashing” was something to watch out for, Puliti said IFC needs to be directly involved in fields like climate financing. “If we don’t have skin in the game in climate financing, I don’t think we’re doing our job,” he said, outlining a vision of “an IFC which is more and more comfortable with more complex and riskier financial products to foster the green transition”.
Puliti underscored India’s strong fundamentals while reiterating IFC’s commitment to invest more in the country. The institution focuses on private sector in emerging markets.
While he believes that “a persistent period of low [global] growth” would impact India, Puliti noted that the economy is robust.
“The banking sector in India is well-capitalised, has adequate level of liquidity… The level of regulation that was put into the system was able to make it work properly,” he said. At the same time, the level of leverage of Indian corporations is “pretty low”. “So, you don’t have an overleveraged private sector, where there is a lot of exposure,” he said.
Terming the funding winter that has beset startups as a cyclical phenomenon, Puliti said now is the time to invest more. “We like to think of ourselves as an institution which is counter-cyclical. If we see a good innovative idea, we go for it,” he said.
Besides long-term financing options, IFC is keen on equity, quasi-equity and mezzanine options, he said.
Mezzanine financing is a hybrid of debt and equity financing.
The focus is on funding companies “trying to adopt digital solutions in the supply chain to increase productivity”, Puliti said.