The government on Wednesday decided to infuse Rs 1,500 crore in the Indian Renewable Energy Development Agency Limited (IREDA), raising its lending capacity to Rs 12,000 crore.
A proposal in this regard was approved by the Cabinet Committee on Economic Affairs.
Briefing reporters after the Cabinet meeting, Information and Broadcasting Minister Anurag Thakur said the decision has been taken in the wake of the RBI's lending norms.
The minister said the infusion of Rs 1,500 crore will enable IREDA to lend Rs 12,000 crore to the renewable sector.
The Cabinet decision will help IREDA to create a renewable energy capacity of 3,500 to 4,000 MW.
As per the RBI lending norms, a lender can lend up to 20 per cent of its net worth. Thus, IREDA would now be able to lend up to Rs 900 crore in an RE project as its net worth is increased to Rs 4,500 crore from the existing Rs 3,000 crore, the official explained.
The official statement said that an additional equity infusion of Rs 1,500 crore by the government will enable IREDA to lend Rs 12,000 crore approximately to the RE (renewable energy) sector, thus facilitating the debt requirement of RE of additional capacity of approximately 3500-4000 MW.
According to the statement, the equity infusion will also enable IREDA to enhance its net worth which will help it in additional RE financing, thus contributing better to the government targets for RE and also improving the capital-to-risk weighted assets ratio (CRAR) to facilitate its lending and borrowing operations.
This equity infusion will help in employment generation of approximately 10,200 jobs per year and CO2 equivalent emission reduction of approximately 7.49 million tonne in a year, it added.
IREDA, a mini 'ratna' company under the administrative control of MNRE (Ministry of New and Renewable Energy) was set up in 1987 to work as a specialised non-banking finance agency for the RE sector.
IREDA with more than 34 years of techno-commercial expertise, plays a catalytic role in the RE project financing which gives confidence to the FIs/banks to lend in the sector.