Small Industries Development Bank of India (SIDBI), a bank dedicated to the financial needs of small businesses, offers 100% loans for rooftop solar installations, which can help MSMEs save on substantial power costs, Abhishek Kumar, DGM, SIDBI, said at Mercom India’s C&I Clean Energy Meet in Noida.

Kumar added that a quick turnaround time and simple application process for loans are tailor-made for micro and small businesses.

Abhishek Kumar was a panelist in a discussion on ‘Innovating Financing Solutions – Ways to Access Cheap Loans.’

Below are some excerpts from his observations during the discussion:

What does SIDBI offer to MSMEs who are looking to install rooftop solar?

Under our programs, which are meant for financing power-saving projects and rooftop solar, the bank provides 100% funding. The loan covers the cost of the equipment, any machine, or electric vehicles.

The ‘4E’ (for energy efficiency projects) loans are based on a minimum of 20-25% cash collateral. However, the bank doesn’t require any collateral security or mortgage under this loan.

Why should MSMEs come to SIDBI instead of any other bank?

My request to MSMEs is that they can come to us to save power or if they want to reduce their power bills by installing rooftop solar. SIDBI can cover it under two programs— 4E and a rooftop solar-specific program.

We are also trying to help the MSME units that are power-intensive and are struggling with utility bills. So, we are actively calling our customers and telling them that with our programs, they can make attractive savings on their energy bills with a reasonable period of payback time on the loans.

What is the cost of loans under these programs?

We are offering interest rates of 7 to 7.7%, which was even lower before the latest repo rate revision by the RBI. For borrowers with robust credit ratings, the interest rate is closer to the lower end of the range. The loan covers solar equipment and even EVs.

The tenure is five years plus an additional six months of the moratorium.

Further, the processing fee for the loan is extremely affordable at 0.25-0.5%.

Compliance is often a hurdle for MSMEs in obtaining loans. What are SIDBI’s requirements?

The process is very fast for these programs, and the application form is also online. A consumer can go to our website and apply. The turnaround time until disbursement is around seven days from the date of application.

We receive the application within seven days, and the money will go to the relevant vendors.

The bank asks for 6-7 types of documents that are simple enough for businesses to produce at the time of application.

Does SIDBI have a renewable target?

SIDBI has a very ambitious target of sanctioning and disbursing loans for 1,000 MW by March 2023.

We have a dedicated Delhi-based vertical for green finance. This means we have a team of professionals with a senior-level official supervising it. We have been issued the policy documents and are actively engaging with MSMEs based on it. We are already distributing flyers regarding power savings.

Mercom India’s C&I Clean Energy Meets bring the commercial and industrial sector face to face with green energy developers and financiers specializing in designing, implementing, and funding renewable energy solutions.

Mercom India will host the ‘C&I Clean Energy Meet’ series across major cities in the country in 2023.