APPENDIX G: SUMMARY OF INDIAN BANKS’ ENERGY EFFICIENCY (EE) SCHEMES

State Bank of India Canara Bank Union Bank of India (UBI) Bank of India (BoI) Bank of Baroda (BoB) (SBI) Scheme title Project Uptech for Loan Scheme for Energy Scheme for Loans for Scheme for Financing EE Projects Energy Efficiency Projects (EEP) Energy Efficiency Savings for SMEs Energy Savings to SMEs Scheme Managed by SME business unit, Priority credit wing Priority-sector lending SME department Priority-sector department national banking group department Initiation  SBI central board  Board approval in April Instruction circular issued to  Board approval in January 2006  Board approval in January 2006 date approval in December 2004 all branches/offices in  Instructions/circular issued to  No formal launch; only a press 2002  Launched at the Peenya September 2004 branches on March 2, 2006 release following distribution to  Launched over the Industrial Cluster in bank branches next six months in Karnataka (southern various circles India) in July 2004 Geographical  Seven circles initially,  Entire country  Entire country  To begin with, all 32 specialized Entire country coverage eventually extended to  Planned to be SME branches entire country in implemented initially in  To be rolled out to other branches January 2004 selected industrial areas later Target  Existing SBI clients  Clients exclusively with  Clients exclusively banking  Client and nonclient SMEs  Existing client SMEs, plus those beneficiaries with sole banking Canara Bank with UBI satisfactorily for a  Clients exclusively banking with BoI whose accounts are being arrangements with SBI  Category S-1 or S-2 period of at least 1 year satisfactorily for at least 1 year taken over by BoB as per extant  Credit rating from SB-1 borrower  SME units with no loan  Nonclient SME units with no loan policy guidelines to SB-4 liability to other banks liability to other banks  The credit rating should not be  Other nonclient SME units less than “BBB” (new model) considered on a case-by-case basis rating  For new SME units, a separate term loan for procuring EE equipment within the overall term loan for financing plant and machinery Eligibility SMEs with investment in SMEs that meet the SMEs that meet the SMEs that meet the following basic SMEs that meet the following plant and machinery of following criteria: following criteria: criteria: basic criteria: less than INR 100 million  Investment in plant and  Investment in plant and  Energy cost savings of at least 150%  Energy cost of not more than (USD 2.2 million) machinery of up to INR machinery of up to INR of cost of servicing the proposed 20% of total production cost 100 million (USD 2.2 100 million (USD 2.2 term loan (interest, installment, and  The EEP to reduce energy cost million) million) other charges) by at least 10% over a 3-year  Energy bill accounting  Annual turnover of up to  Energy audit done by a BEE/PCRA- period for at least 20% of total INR 1 billion (USD 22 approved auditor or an auditor who  Energy audit to be conducted production cost million) has done similar work for other by IREDA-approved  Energy bill accounting for reputed companies auditor/ESCO/consultant at least 20% of total  Average DSCR to be at least production cost 1.50 Have an energy audit report  Debt component to be at most prepared by an IREDA- 75% approved energy auditor/consultant State Bank of India Canara Bank Union Bank of India (UBI) Bank of India (BoI) Bank of Baroda (BoB) (SBI) Loan amount  Maximum of 90% of  90% of total project cost,  75% of project cost,  Up to 80% of project cost, subject to Up to 75% of project cost, subject project cost or INR 10 subject to a maximum of subject to a maximum of a maximum of INR 10 million (USD to a maximum of INR 10 million million (USD 220,000), INR 10 million (USD INR 10 million 220,000) (USD 220,000) and a minimum of whichever is lower 220,000) (USD220,000)  Overall debt-equity ratio should not INR 500,000 (USD 11,000)  If 90% of project cost No minimum loan size  Project to have a exceed 4:1 for SSI and 3:1 for (project cost may include cost of exceeds INR 10 specified maximum DSCR of 1.3 medium industries (project cost acquisition/modification/renovatio million, the balance (project cost to include would include n of equipment/software; cost of amount to be funded cost of energy auditing and consultancy/management fees, cost alterations to existing machinery, through SBI’s normal consultancy, energy of EE equipment, cost of cost of structural layout changes, loan schemes savings equipment, modifications to existing plant and cost of energy Minimum of INR 200,000 software, cost of effecting machinery, reengineering the audit/consultancy/preparation of (USD 4400) modifications to existing manufacturing process, and interest DPR machinery, etc.) during implementation period. Also consider cost of energy audit as part of project cost once the unit has the same done initially at its own expense and finds scope for substantial reduction in cost Interest rate In effect from May 1, 1% below the prevailing As per existing guidelines for 1% less than the term loan rate Benchmark prime lending rate 2006 rate for loans of similar SMEs charged from the SME beneficiary, (10.5% at present)  0.5% below SBAR for tenure for other SME subject to a minimum of 9% loans up to INR 25 borrowers lakhs  SBAR for loans between INR 25 lakhs and INR 50 lakhs  0.25% above SBAR for loans above INR 50 lakhs  Present SBAR— 13.75% Other terms  Term of 5 to 7 years,  Term of 5 to 7 years,  Project dependent, but not  Repayment not to exceed 7 years,  Maximum 5 years, including including a moratorium with a moratorium of up to exceed 7 years, including moratorium period of 6 moratorium if any period of up to 12 to 6 months including a moratorium months  One-time processing fee of months  Security/insurance/inspe period of up to 6 months  Generally, loan through EE scheme 0.5% of loan amount, with a  Commitment fee of ction/follow-up/service  Security/insurance/inspecti to be aid in the currency of existing minimum of INR 2500 (USD 55) INR 10,000 per charges as per existing on/follow-up/service term loan (if for acquiring plant and and a maximum of INR 10,000 borrower initially (now guidelines for SMEs charges as per existing machinery) (USD 220) reduced to INR 5000  Additional incentives: guidelines for SMEs  EE loan-processing charges waived  Security for sole banking per borrower) grant of 25% toward  Subsidy of INR 25,000 for existing SME clients accounts and extension of first  Additional incentives cost of energy audit and from IREDA to partially  Security: (1) hypothecation of charge on all fixed assets include 50% of cost of DPR (max. INR 25,000) cover the cost of energy equipment purchased and (2)  Security for consortium/multiple energy audit and DPR for first 100 applicants; audit for first 100 projects extension of charge on existing banking accounts first charge up to a maximum of additional grant of INR on a first-come, first- assets, where applicable on equipment acquired from State Bank of India Canara Bank Union Bank of India (UBI) Bank of India (BoI) Bank of Baroda (BoB) (SBI) Other terms INR 50,000, of which 25,000 from IREDA served basis  Eligible loans to SSE units to be loan under the EE scheme, with (cont.) half the amount to be through GEF TA to  Eligible loans of up to INR covered under CGFSI total security cover of not less shared with IREDA partially cover energy 2.5 million (USD 55,500) than 1.25 through the GEF TA audit available for first sanctioned to SSI units to 100 audits be covered under CGFSI  Eligible loans of up to INR 2.5 million (USD 55,500) sanctioned to SSI units to be covered under CGFSI Sanctioning  Circle credit committee  SME business unit at As per existing guidelines for As per existing guidelines for SMEs As per existing guidelines for authority at local head offices for the head office of SMEs SMEs grant to cover cost of Canara Bank (grants energy audit and DPR only)  Loan sanction on a Loan sanction as per case-by-case basis delegated powers depending on the amount of the loan

Source: IREDA