Renewable energy push
India’s renewable energy sector is likely to be classified as a priority sector to channelise easier loans. This means banks will lend to the sector at lower interest rates
NEW DELHI: To channelise easier loans, India’s renewable energy (RE) sector is likely to be classified as a priority sector in the upcoming budget. This means banks will lend to the sector at lower interest rate similar to agriculture, micro and small enterprises, education, housing and others.
The sector has already received investment commitments of over $300 billion (`18 lakh crore) over 5-7 years for adding a capacity of 266,000 megawatt (mw).
“We are hopeful that prior- ity sector status for renewable energy may come either as part of the upcoming budget proposal or even later as the government is very keen to promote the development of this sector,” a senior official in the renewable energy ministry said seeking anonymity.
“The renewable energy ministry has already suggested to the finance ministry that solar and wind energy projects be included within priority sector norms of banks as they face a huge fund shortage due to payment risks perceived by lenders,” he added.
The banks are currently wary of lending to the power sector due to rising cases of non-performing assets (NPAs) — loans that do not yield returns.
Stating that new norms on lending and appraisal of projects in the renewable energy sector would be soon chalked out, TM Bhasin, chairman, Indian Banks’ Association, told HT a high-powered panel comprising senior bankers, bureaucrats and industry representatives would be set up this week to look into the issue. “Mechanisms would be carved out to ensure projects do not run non-productive for lenders.”
The issue would also come up for discussion on March 5 during a meeting between finance minister Arun Jaitley and bank chiefs.
“If interests worth 266,000 mw green capacity have come from the industry, it’s also a big challenge for the government to ensure that nothing gets stuck for any lapse on our end,” renewable energy secretary Upendra Tripathi told HT.