The hedge fund, based in London and New York, will "Put up cash to cover unexpected loan losses in return for a cut from the bank. The fund’s cash will lower the banks’ requirements under the Basel capital rules and reduce the impact of planned tighter rules. IFC hopes the fund will encourage an extra $2.5bn to $4bn of lending to developing countries. " FT reported.
IFC is the largest global development institution focused on the private sector in developing countries.