Public sector banks have made ‘green lending’ commitments totalling ₹1,70,740 crore to help stakeholders put up renewable energy projects over the next five years.

At an average project cost of ₹5 crore per megawatt (MW), green energy generation in the country is expected to increase by 34,148 MW during this period.

The green lending commitments were recently made by the banks to the Ministry of New & Renewable Energy (MNRE).

The sources of green (clean) energy include wind, small hydro, biomass, and solar. They supplement fossil fuel-based electricity generation.

Among the banks that have made large commitments to green energy lending are: State Bank of India (₹75,000 crore/ 15,000 MW); IDBI Bank (₹14,700 crore/ 2,940 MW); Bank of Baroda (₹12,500 crore/ 2,500 MW); and Bank of India (₹10,000 crore/ 2,000 MW).

Some of the other state-owned banks that have made commitments include: Bank of Maharashtra, Punjab National Bank and Union Bank of India (₹7,500 crore/ 1,500 MW each); and Andhra Bank, Central Bank of India and Corporation Bank (₹5,000 crore/ 1,000 MW each).

Renewable energy accounted for about 13 per cent of the national installed electricity capacity (of 2,45,268 MW as at March-end 2014). According to the MNRE, applications based on this energy have benefited millions of people in villages by meeting their cooking, lighting and other energy needs in an environment-friendly manner.

As on December-end 2014, India had grid-linked (renewable) power generation capacity of 33,792 MW (31,703 MW as on March-end 2014) and off-grid/ captive (renewable) power of 1,123 MW (1089 MW).

The importance being attached to green development is underscored in Finance Minister Arun Jaitley's Budget speech and the RBI’s proposal (according to the report of the internal working group) to revise priority sector lending (PSL) guidelines.

Jaitley said “as environmental degradation hurts the poor more than others, we are committed to make our development process as green as possible.”

RBI’s report recommended that banks provide loans of up to ₹10 crore to borrowers other than households, for purposes such as setting up solar-based power generators, biomass-based power generators, and wind mills as well as non-conventional energy-based public utilities – including street lighting systems and remote village electrification – and include them in the priority sector.

For the household sector, the loan limit (for renewable energy) could be set at ₹5 lakh, the report said.