Renewables Projects Included in India’s Priority Sector Lending

Updated on

India’s central bank asked lenders to treat loans to renewable energy projects as priority, aiding a $200 billion federal spending plan to set up solar plants and wind farms.

Social infrastructure and medium enterprises will also be given priority, the Reserve Bank of India said in a notification on its website. Sectors such as agriculture and micro enterprises already enjoy priority lending.

The directive will help lenders differentiate renewable energy projects from the power sector, where banks are wary of lending because of an increase in stressed assets. Easy credit is crucial to Prime Minister Narendra Modi’s plan to harness clean energy and show his government’s resolve to protect the environment in the world’s third-biggest polluting nation.

India plans to more than double the share of renewables in energy consumption to 15 percent in five years, according to Piyush Goyal, minister for coal, power and renewable energy.

Banks have committed to fund 3 trillion rupees ($47.2 billion) of renewable projects, the government said in February during a global seminar organized to raise interest in the nation’s solar and wind plans.

Banks have to set aside a certain portion of their total advances for lending to priority sectors.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE