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Banks free to have separate caps for lending to power, renewable sectors: RBI to Centre

The RBI has written to the Centre saying it does not have any objection to banks categorising the power and renewable energy sectors separately for lending.

Speaking at the event CII Energising India, CEOs Dialogue on Power and Renewable Energy, Minister of State (Independent Charge) for Power and New and Renewable Energy, RK Singh, said: “The Ministry of Power has spoken with the RBI and Finance Ministry.

“The RBI has no objection to banks setting separate limits for renewable energy.” The move is meant to encourage banks to lend more and help developers gain access to easier finance.

In June, the Ministry of New and Renewable Energy (MNRE) had asked the RBI to remove the priority sector lending limit for renewables. This was one of the demands raised by the industry at a brainstorming session conducted by the MNRE.

The priority sector lending limits for renewable energy were said to be stunting the growth of the sector as banks were clubbing the power and renewables sectors under one umbrella. This dried up the capital availability for renewable companies.

The move to ask banks and financial institutions to categorise renewable energy as a separate sector different from the power sector is being done so that funds would flow more to renewable energy projects, according to Singh.

He also requested banks to come forward to lend more to the renewable energy sector.

News Date: 01-Aug-2019

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