State Bank of India, the nation’s biggest lender by assets, said it will lend 23.17 billion rupees ($357 million) to six companies for 575 megawatts of grid-connected rooftop solar projects under a World Bank programme.
The State Bank of India (SBI) logo is seen on bags carried by participants during a news conference in Mumbai, India October 30, 2017. REUTERS/Shailesh Andrade
SBI, which accounts for more than a fifth of India’s banking assets, has a total loan exposure of about 120 billion rupees to the solar sector, excluding the latest loans, Chairman Rajnish Kumar told reporters on Monday.
Renewable energy is being seen as a growth sector for India, a signatory of the Paris climate accord, with an ambitious plan to raise renewable energy capacity to 175 gigawatts (GW) by 2022, from 57 GW currently. Of that, solar is estimated to account for 100 GW.
“We are comfortable with the sector because at least many risks which are normally associated with thermal power projects are not there,” Kumar said. “Only thing is we have to see the commercial viability apart from the usual credit due diligence.”
Loans to traditional coal-fired power plants are the second biggest contributor to Indian banks’ soured loans, which hit a record $146 billion at end-June.
The six companies that SBI will lend to in the latest round to set up solar projects are JSW Energy, Hinduja Renewables, Tata Renewable Energy, Adani Group, Azure Power, Cleantech Solar and Hero Solar Energy.
SBI’s announcement comes after the Indian government this month unveiled a more than $32 billion recapitalisation of state-run 21 banks including SBI, in a bid to help resolve their soured assets, meet capital ratios mandated by global Basel III banking rules and to kickstart credit growth.
The loans announced on Monday are part of a previously planned $625 million funding programme from the World Bank.
Reporting by Devidutta Tripathy and Abhirup Roy, editing by Louise Heavens