Page 287 - Low Carbon Development in China and India
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international assistance and domestic borrowings in the form of credit
from other banks and issuance of long-term bonds.
IREDA has intended to lend INR 14,000–16,000 crore (approx.
USD 2.333–2.666 billion) in 2014 over the next three years (Upadhyay,
2014); equivalent to as much as it has disbursed for the past 28 years
it has existed, illustrating the growing interest of investors in clean
energy business. It launched its first green bond in February 2014
worth INR 500 crore (approx. USD 83.33 million) total (with an option
to extend to INR 1,000 crore [approx. USD 166.67 million]) to support
renewable energy projects. At the end of 2014, the US EXIM bank
agreed to provide medium and long-term loans for up to USD 1 billion
for IREDA affiliated projects. This credit facility can be utilized during
commercial development activities, within the clean energy sector by
IREDA, to import US technologies, products and services, and finance
up to 30 per cent of domestically manufactured components.
Given the magnitude of the required resources, IREDA would
have to be significantly strengthened to be capable of responding to,
and in many areas anticipating, the needs and complexities of the low
carbon transition, and thereby designing new and efficient financial
instruments to meet these needs. Therefore, there is a need to broaden
the sources of funds for financing such investments as well as the
manner in which these funds are intermediated. Effective long-term
availability of funds for facilitating the shift to low carbon investment
would necessitate large-scale, well-constructed involvement of public
financial institutions with specific focus on driving the transformation
to low carbon energy.
2.2.2 Traditional Finance
Banking
Traditional finance in India has not managed to come up with a
common framework to encourage companies to go green. However,
despite the absence of green credit guidelines, some banks have taken
initiatives independently.
There is the case of the State Bank of India, the country’s largest
bank, which introduced a ‘Green Home’ loan, with special concessions
(reduced margin, softer interest rate, and zero processing fees) for
environment-friendly housing projects. The other well-known bank
which finances green projects is SIDBI (Small Industries Development
Bank of India). It provides micro, small and medium enterprises
financial assistance for technology innovative projects, with a
preference being given to the green sector. Thanks to special lines of
252 Low Carbon Development in China and India
from other banks and issuance of long-term bonds.
IREDA has intended to lend INR 14,000–16,000 crore (approx.
USD 2.333–2.666 billion) in 2014 over the next three years (Upadhyay,
2014); equivalent to as much as it has disbursed for the past 28 years
it has existed, illustrating the growing interest of investors in clean
energy business. It launched its first green bond in February 2014
worth INR 500 crore (approx. USD 83.33 million) total (with an option
to extend to INR 1,000 crore [approx. USD 166.67 million]) to support
renewable energy projects. At the end of 2014, the US EXIM bank
agreed to provide medium and long-term loans for up to USD 1 billion
for IREDA affiliated projects. This credit facility can be utilized during
commercial development activities, within the clean energy sector by
IREDA, to import US technologies, products and services, and finance
up to 30 per cent of domestically manufactured components.
Given the magnitude of the required resources, IREDA would
have to be significantly strengthened to be capable of responding to,
and in many areas anticipating, the needs and complexities of the low
carbon transition, and thereby designing new and efficient financial
instruments to meet these needs. Therefore, there is a need to broaden
the sources of funds for financing such investments as well as the
manner in which these funds are intermediated. Effective long-term
availability of funds for facilitating the shift to low carbon investment
would necessitate large-scale, well-constructed involvement of public
financial institutions with specific focus on driving the transformation
to low carbon energy.
2.2.2 Traditional Finance
Banking
Traditional finance in India has not managed to come up with a
common framework to encourage companies to go green. However,
despite the absence of green credit guidelines, some banks have taken
initiatives independently.
There is the case of the State Bank of India, the country’s largest
bank, which introduced a ‘Green Home’ loan, with special concessions
(reduced margin, softer interest rate, and zero processing fees) for
environment-friendly housing projects. The other well-known bank
which finances green projects is SIDBI (Small Industries Development
Bank of India). It provides micro, small and medium enterprises
financial assistance for technology innovative projects, with a
preference being given to the green sector. Thanks to special lines of
252 Low Carbon Development in China and India
