IREDA Signs MoU with IOB For Co-lending For Renewable Energy Projects

IREDA Signs MoU with IOB For Co-lending For Renewable Energy Projects. Photo: MNRE

Indian Renewable Energy Development Agency Ltd. (IREDA), a non-banking financial institution under the Ministry of New and Renewable Energy (MNRE), has signed a Memorandum of Understanding (MoU) with Indian Overseas Bank (IOB) pertaining to co-lending and loan syndication for a diverse spectrum of renewable energy projects across the country. The MoU includes provisions for co-lending and co-origination support for all projects related to renewable energy.

The partnership aims to streamline loan syndication and underwriting processes, management of Trust and Retention Account (TRA) for IREDA borrowers, and work towards fixed interest rates over a 3–4-year period for IREDA borrowings.

The agreement between IREDA and IOB was signed on 16^th January.

Speaking about the MoU, IREDA CMD Pradip Kumar Das said, “This strategic partnership between IREDA and Indian Overseas Bank marks a significant step in our commitment to accelerate the growth of renewable energy in the country. By combining our strengths and resources, we aim to provide robust financial support to a diverse range of Renewable Energy projects, fostering sustainability and environmental awareness. Through the MoU and prior agreements with other leading financial institutions, IREDA is well-positioned to fund large-scale renewable energy projects, aligning with the PM’s COP26 announcement of achieving a 500 GW Non-Fossil-based electricity generation capacity by 2030.”

Following the agreement, IREDA shares rose to over 5 percent on January 17 to an all-time high of Rs 125.60 on the NSE, as reported by business portal Moneycontrol.

In September last year, IREDA signed memorandums of understanding (MoUs) with the Union Bank of India (UBI) and Bank of Baroda (BoB) regarding the co-lending of renewable energy projects and their expansion, especially in smaller towns and rural areas.

If we delve into the funding of renewable projects in India, Sovereign Green Bonds of Rs 16,000 crore were raised by the Centre for low-cost funds for Renewable Energy Projects. Out of the proceeds of Sovereign Green Bonds, Rs. 6,186 crores were dedicated to renewable energy. Union Minister for New & Renewable Energy and Power has also informed that the draft National Electricity Plan (May 31, 2023) has estimated the fund requirement for solar and wind generation projects during FY 2022 – 2032 as Rs 20.67 lakh crore.