Centre to nudge banks to fund renewable energy projects

Ministry of New and Renewable Energy urges banks to commit loans for India's renewable energy projects at Re-Invest summit.

To help meet India’s ₹30 trillion funding requirements for installing 500 GW of non-fossil fuel capacity by 2030, the Ministry of New and Renewable Energy is in talks with financial institutions, public and private sector banks, urging them to commit a portion of their loans to renewable energy projects.

At the forthcoming Re-Invest summit, scheduled in Gandhinagar next week, all major banks and financial institutions will be giving “shapath patra” (promissory notes) about their proposed loans or funding plans in the renewable energy sector, Pralhad Joshi, Minister for New and Renewable Energy, said at a press briefing on Wednesday (September 10, 2024). Such “shapath patra” would be given by developers, manufacturers and private equity investors, he added.

“We have not specified any targets but banks are expected to give firm commitments. Only with the participation of banks and industry can India hope to attract finance to facilitate the renewable energy sector,” said Mr. Joshi.

Prime Minister, Narendra Modi, is scheduled to inaugurate the conference.

Also read:The challenges of renewable energy 

In a statement to the Rajya Sabha last year, R.K. Singh, former Renewable Energy Minister, said that the Reserve Bank of India had included bank loans up to a limit of ₹30 crore to borrowers for purposes like solar-based power generators, biomass-based power generators, windmills, micro-hydel plants and for renewable energy-based public utilities, under Priority Sector Lending classification. However, actual terms and conditions of the loans, including the requirement of collateral security, vary among different banks/financial institutions based on factors such as exposure of banks/institutions to the sector, creditworthiness of the borrower, and risk perception.