Indian Solar Loan Programme

A four-year $7.6 million effort was launched in April 2003 to help accelerate the market for financing solar home systems in southern India. The project is a partnership between UNEP Energy Branch, UNEP Risoe Centre (URC), two of India's major banking groups - Canara Bank and Syndicate Bank, and their sponsored Grameen banks.

India's solar PV manufacturing sector has grown significantly since the 1990s, mostly for export, however the market for solar home systems has been slow to develop, in part due to a lack of consumer financing options. The aim of this effort is to help Canara bank and Syndicate bank develop lending portfolios specifically targeted at financing solar home systems (SHS). With the support of the UN Foundation and Shell Foundation, the project provides an interest rate subsidy to lower the cost to customers of SHS financing.

Indian banks are these days keen to develop new loan products and the partnership with UNEP allows them to do so in a growing clean energy sector. An interest subsidy helps them to build solar financing portfolios without distorting the credit risk - sometimes a problem with guarantees - or the existing cash market for solar home systems.

Five solar vendors completed the programmes` qualification process, making their customer eligible for financing. An update of programme status can be downloaded here.

Find below interview clips with Eric Usher, UNEP Programme Manager for the Indian
Solar Loan Programme (In this interview, Eric Usher discusses the need and new approaches to engage the finance sector for lending to the clean energy sector, why the Indian Solar Loan Programme succeeded, and the ‘moral hazard’ of too much money in the wrong place. Each segment is about 3-4 minutes)