National Bank for Agriculture and Rural Development (NABARD) has come out with a scheme to encourage banks to provide credit for solar power.
Formulated under the Jawaharlal Nehru National Solar Mission, the scheme envisages NABARD providing capital subsidy and refinance to banks that provide loans for installation of solar off-grid and decentralised applications, R. Shankar Narayan, NABARD Assistant General Manager, told The Hindu here on Thursday.
The ambitious mission of the Union Ministry of New and Renewable Energy (MNRE) plans to generate 20 gigawatts by 2020 by establishing solar photovoltaic (SPV) and solar thermal power plants across the country.
The NABARD had recently come out with guidelines for this scheme, for which commercial and regional rural banks could apply. These banks would be able to avail re-finance options from NABARD for their loans given out to solar projects
“The objective of the scheme is to ensure affordable, adequate and uninterrupted power supply to domestic and other consumers. This scheme will also reduce reliance on fossil fuels by helping exploit solar power which can be tapped for nearly 300 days a year,” he said.
Banks can avail of this scheme for loans already given out to solar projects, provided it was disbursed after November 1, 2010. The scheme remains operational till March 31, 2013.
The MNRE had approved eight modules depending on battery capabilities and had provided the indicative cost obtained from approved dealers. For each project, a capital subsidy of 30 per cent would be given with 50 per cent of the project cost covered by loan and the beneficiary would have to contribute the remaining 20 per cent.
Mr. Narayan informed that as the banks would be given refinance at a rate of only 2 per cent, they must lend at a concessional interest rate of 5 per cent
The project models could be home lighting systems or inverter-based systems. The manufacturer must provide energy-efficient compact fluorescent lamps (CFL) and light-emitting diode (LED) and give an undertaking to meet all requirements.
The subsidy was uniform to all beneficiaries regardless of their category or location such as urban/rural. Banks must sanction the loan including the subsidy before availing refinance from NABARD. No interest must be charged on the interest component, he informed.
The guidelines would be placed during a District Consultative Committee meeting of banks and Government officials and circulated through the Lead Bank. A State-level monitoring committee convened by NABARD and comprising officials from MNRE, Tamil Nadu Energy Development Agency (TEDA) and banks would meet once a quarter to discuss scheme implementation.
