The Reserve Bank of India’s (RBI) decision to grant special status to the renewable energy sector, among others, under priority sector lending, is expected to accrue large benefits for the sector. This is also expected to ensure energy security of the country, which is currently betting big on renewable energy with a target to achieve 100 GW of green energy by 2022.
“RBI’s move is indeed progressive. It will help contribute to India’s renewable energy portfolio. This will boost investments from the SME sector in renewable space as finance will be available at a competitive rate as bankers have separate allocation and priority for the sector,” said Tulsi Tanti, Chairman, Suzlon Group, which is into wind energy.
The move will help SMEs to grow and expand their manufacturing capacity as they would become competitive due to availability of low cost of energy for the next 25 years.
According to experts, the RBI’s move should help in rapid installation of roof-top solar panels across the country to harness solar energy for local applications. “It is a welcome move. Now since funding is in place, the government should primarily focus on popularising roof top applications to augment renewable energy,” said Sunil Khanna, President and Managing Director, Emerson Network Power India.
In solar, a paradigm shift can be expected when rooftop solar systems would be allowed to come up en-mass through coordinated policies as opposed to fragmented State-by-State trial and error learning curves, which causes irreparable damage to confidence and commitment of investors and technology providers.
As per RBI’s notification, Renewable Energy has come under priority sector lending along with medium enterprises and social infrastructure. Now commercial banks need to extend loans of up to a limit of Rs.15 crore to borrowers for setting up solar based power generators, biomass based power generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities such as street lighting systems and remote village electrification. For individual households, the loan limit will be Rs.10 lakh per borrower.
