Small Industries Development Bank of India (SIDBI) and Shell Foundation have launched a $6-million Risk Sharing Facility (RSF) to improve access to finance and ramp-up the adoption of electric two- and three-wheelers across India.
SIDBI, India’s principal financial institution for MSMEs, and the UK-based Shell Foundation, which catalyses clean energy innovation in Africa and India, will contribute $3 million each to provide partial credit guarantee to electric vehicle (EV) ecosystem players who support EVs for commercial use.
The agreed cap is 7.5 per cent of second loss layer, that will unlock approximately $81 million of commercial capital for EV asset financing, according to a SIDBI statement.
The RSF will compliment EV Mission 30@30 through SIDBI Mission 50KEV4ECO (enabling ecosystem to foster 50,000 EVs).
Sivasubramanian Ramann, CMD, SIDBI said: “In line with the national mission of EV30@30, SIDBI has adopted EVs as a thrust segment. By launching mission 50KEV4ECO, we are promoting the entire EV value chain.”
RSF is an important instrument to provide initial comfort to lenders operating in emerging and unserved or underserved segments, he added.
“We expect the risk sharing facility for EVs will address the lack of access and affordability of commercial financing due to actual and perceived risks associated with EV lending,” Ramann said.
This risk sharing facility will be followed by scaling up support to the ecosystem with multilateral support under the Electric Vehicles Operations and Lending for a Vibrant Ecosystem (EVOLVE) programme.
Sudhendu J. Sinha, Adviser (Infra & e-mobility), NITI Aayog said: “…This pilot RSF initiative will further strengthen our resolve to move the EV ecosystem upward.
“As we know electric vehicle financing is predominantly done by small/ unrated NBFCs. These NBFCs have deep and extensive knowledge of the EV sector. It is expected that commercial banks and NBFCs will speed up finance of EV assets for commercial use. This would address the challenge of access to affordable finance.”
Jonathan Berman, CEO of Shell Foundation, said: “This partnership with SIDBI is directly aligned with our mission to empower five million urban transporters to earn a living income by transitioning to electric mobility by 2032.
“The creation and launch of RSF facility will stimulate the EV financing sector for two- and three-wheelers, which are used as income generating assets. This will scale access to two- and three-wheeler electric vehicles for 50,000 urban transporters and empower them to increase their incomes by up to 70 per cent.”