SBI provided 319.18 billion yen in financing for renewable energy projects as of fiscal 2021
The State Bank of India (SBI), one of India’s largest public sector banks, reported its results for fiscal year 2020-2021, saying the bank approved more than 319.18 billion yen (~ $ 4.26 billion) in a renewable energy project. finance in India from March 2021.
The bank introduced a ‘renewable energy policy’, incorporating various segments such as ground-based solar power, wind power, grid-connected rooftop solar power, small hydropower (up to 25 MW ) and energy recovery from waste. According to the bank, it had financed 752 renewable energy projects with a total installed capacity of 13,801.7 MW until March 31, 2021.
The funding includes 185.65 billion yen (~ $ 2.48 billion) for ground-based solar photovoltaic (PV) projects; 18.64 billion yen (~ $ 249.21 million) for rooftop solar projects; 91.37 billion yen (~ $ 1.22 billion) for wind power; 20.93 billion yen (~ $ 279.8 million) for small hydropower projects; 1.65 billion yen (~ $ 22.05 million) for biomass projects; and 940 million yen (~ $ 12.56 million) for waste-to-energy projects.
Some of SBI’s revolving funding programs:
- the grid-connected rooftop solar photovoltaic projects the program finances small projects with a capacity of up to 1 MW to popularize the use of renewable energies among commercial and industrial entities (C&I) with smaller roofs; 6.88 billion yen (~ $ 91.94 million) has been approved under this program.
- the financing of solar photovoltaic pump units This initiative helps farmers finance their purchases while reducing the environmental footprint.
- Under the e-rickshaw program, The SBI has allocated 142.1 million yen (approximately $ 1.89 million) for electric rickshaws as of March 31, 2021.
According to SBI Chairman Dinesh Khara, the bank also signed a memorandum of understanding with the Luxembourg Stock Exchange to stimulate the environment, social and governance (ESG) funds and bond market.
The bank received an “A” rating from Morgan Stanley Capital International ESG Ratings in December 2020, a significant improvement given that it was rated “BB” in September 2020. The bank also raised green bonds worth of approximately $ 800 million since fiscal year 2018-19 and a âgreen loanâ worth â¬ 50 million (approximately $ 59.18 million) in fiscal year 2020-21.
SBI has also partnered with several international banks and funding agencies to expand its responsible investment activities. These institutions provide lines of credit that the bank uses to finance projects with positive environmental and social impacts.
Some of the existing lines of credit are:
- $ 625 million from the World Bank: Signed in 2016, this line of credit aims to improve clean energy production in India. Loans are provided to install solar panels on rooftops to enable consumers to meet their energy needs in a sustainable manner.
- $ 300 million from the German Development Bank KfW: since it was signed in 2015, this line has enabled SBI to provide loans to agriculture and related activities, small businesses, small industries and renewable energies, among others.
- $ 277 million from German Development Bank KfW: Encouraging builders and mortgage borrowers to opt for energy-efficient alternatives.
- $ 177.3 million from the KfW German Development Bank: this credit line granted in 2018 aims to stimulate renewable energies in India. It aims to build on the reach and expertise of the Indo-German solar energy partnership to finance renewable energy projects, thus contributing to the fight against climate change.
- $ 214.3 million from the European Investment Bank (EIB): The EIB granted this line of credit to the SBI in 2017 to reduce dependence on fossil fuels. Since then, it has been used to fund large, entirely new solar power projects in India, progressing towards the National Solar Mission.
In May of this year, the EIB and the SBI launched a new â¬ 100 million (approx. $ 121.63 million) initiative for financing climate action and sustainability. In addition, in collaboration with the World Bank, SBI has so far trained 350 employees on the processing of solar project proposals.
SBI also recognized the growing risks of climate change embedded in its portfolio of credit assets and initiated the process of formulating a climate risk management framework to mitigate the crisis.
In addition, SBI is also developing a framework for identifying and managing risks arising from ESG practices. The bank is developing a structure to integrate the ESG risk assessment into the overall credit risk assessment, which is being revised to assess its feasibility.
During a webinar hosted by Mercom in April 2021 on Project Finance, Hitesh Paliwal, Senior Vice President and Zone Manager, North Zone, Corporate Banking Group, SBI, said that in recent years, the bank had seen 6-10 GW adding capacity in the Indian renewable sphere every year. The overall composition of SBI’s power assets stood at 3 trillion yen (about $ 39.78 billion), while the composition of renewables in India’s power mix was around 11%, Paliwal noted.
Image credit: Digamber, CC0, via Wikimedia Commons
Rahul is a journalist at Mercom India. Prior to entering the world of renewable energy, Rahul was the head of the Gujarat office for The Quint. He also worked for DNA Ahmedabad and Ahmedabad Mirror. Coming from a banking and financial background, Rahul also worked for JP Morgan Chase and State Bank of India. More articles by Rahul Nair.