About 75 percent of the forex risk would be hedged by a swap with the Central Bank and the rest would be covered with dollar denominated loans.
IFC itself has provided 20 million US dollars.
Union National Bank, UAE had provided 25 million; HSBC, 25 million, Standard Chartered 20 million; Axis Bank, India 15 million, Doha Bank, Qatar 10 million and Bank Muscat, Oman 10 million dollars, IFC and NDB said in a joint statement.
NDB chief executive Rajendra Theagarajah said the loan will be used to finance small and medium enterprises and also small renewable energy projects.
The 125 million US dollars had an average tenor of over 5 years and allowed the NDB to lend a part of the funds for up to 6-7 years.
"IFC's syndication for NDB demonstrates growing investor confidence in Sri Lanka, and will help NDB expand finance options across the country," Adam Sack, IFC's country manager said.
Sack said up to 50,000 small and medium firm would get credit from the funds.
Another 70 million would come by June 2014 raised from international development finance institutions.
The second part of the loan will would be used to finance infrastructure with credit for up to 10 years.