India has already announced its aim to achieve
net zero emissions by the year 2070. Another more significant milestone that
India aims to achieve is to meet 50% of its total electricity requirements from
renewable energy sources.
As per an EY report, to accomplish the target of
net zero emissions by the year 2070, India requires a $10 trillion budget.
And guess what, Banks are running the show.
According to RBI data cited by ETBFSI Research,
outstanding bank loans to the renewable energy sector have grown more than 100%
year on year reaching Rs.4191 Cr by Oct, 2022 from Rs.2073 Cr a year earlier.
State Bank of India in the first week of January,
2024, raised a $1 billion Syndicated Social Loan which will be deployed to
finance Environmental, Social and Governance (ESG) projects.
Syndicated Loan is a structure where a group of
lenders work together to provide credit to a borrower.
The Reserve Bank of India, last year in April,
launched the framework for acceptance of Green Deposits by Banks and NBFCs to
create a green finance ecosystem in the country. The Green deposit flows will
then be deployed to finance Green Projects.
The framework to accept Green Deposits came into
effect on 1st June, 2023 and today several banks including State
Bank of India (SBI), HDFC Bank, Central Bank of India, AU Small Finance Bank,
South Indian Bank and many more offer Green Deposit Schemes.
Several other banks have announced partnerships
and launched diversified product offerings to further boost the green finance
ecosystem.
Bank of Maharashtra collaborated with IREDA in
September 2023 for co-lending and loan syndication to boost financing for the
renewable energy sector.
Whereas Canara Bank launched various products
such as solar pump scheme under (PM-KUSUM).
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