Ireda Ncef Refinance Scheme

India is facing a major challenge in providing suitable and superior quality power for domestic and industrial purpose. The already functioning renewable energy projects are facing uncertainties in regulations. There is an increasing demand to lessen the dependency on fossil fuels and obtain greener fuel in the country. The Ministry of Commerce and Industry has set up the Indian Renewable Energy Development Agency Ltd (IREDA) to refinance the affected renewable energy projects and revitalise their operations. The scheme Indian Renewable Energy Development Agency National Clean Energy Fund (IREDA NCEF) focuses on providing loans at concessional rate of interest to revive the functioning of existing Small Hydro Power (SHP) and Biomass combustion-based power generation projects. Also, learn about

Objectives of the Scheme

The IREDA NCEF scheme aims to achieve the following objectives:

• To provide refinance assistance at competitive rates of interest by sourcing funds from the National Clean Energy Fund (NCEF)
• To assist power generation units in overcoming the unanticipated accidents such as floods, thunders, draughts etc., and unreliable strategy matters such as cancellation of PPAs, higher transmission and subsidy charges, higher wheeling and bank burdens etc.
• To revitalise the operations of the already available Biomass Power and Small Hydro Power projects
• To reduce the expenses of the power generation projects
• To encourage ecologically supportable power generation and growth

Eligibility Criteria

IREDA disburses the fund released from the NCEF to the scheduled commercial banks and other financial institutions based on the following eligibility criteria:

• The renewable energy projects should be properly functioning for a minimum of three years and should have no materialistic losses.
• The grossNon-Performing Assets as a percentage of Gross Advances should normally not exceed 5% for the entire range of the lending institution. State/Central PSU Banks/Govt. NBFC’s/FIs are not included in this condition parameter.
• The Capital Adequacy Ratio should be in compliance with the Government approved regulatory norms.
• The combustion based Biomass power projects with the installed capacity of 10 MW are eligible to claim loan under the scheme.
• Each Small Hydro Power Projects with the installed capacity of 25 MW can claim refinance up to Rs.15 Crores under the scheme.
• The Renewable Energy Units should have an operational activity for at least 2 years after the commissioning of the project.
• In the case of plant operating for more than 2 years, then the average PLF should be 20% for Biomass power and 15% for Small Hydro Power (SHP) Projects
• Loan Sanctioned against reservation of future cash flows are not eligible to claim refinance under the scheme.
• Once the beneficiaries obtain the loan amount, the projects should be revived within 6 months from the date of claim.
• In case of failure to meet the criteria, the disbursed amount will be recalled immediately by the IREDA. The IREDA may demand the plants to repay the loan amount in a single term.
• The Financial Institutions/Banks can appeal for additional time for the revival of projects up to 1 year, on submission of appropriate reasons to the IREDA.

The Renewable Energy Projects that are ineligible to apply for the claim under the scheme are as follows:

• Borrowers declared as obstinate by the Reserve Bank of India
• Non-cooperative borrowers, as mentioned in the RBI norms.
• Projects that are not operational for the past five years.
• Projects with the profitable turn over as per their latest Audited Balance Sheet
• Projects which availed One Time Settlement (OTS)

Mode of Repayment

The guidelines laid down by the

• The Scheduled Banks/Financial Institutes are liable to pay the rate of interest of 2% per annum for the total to refinance amount obtained and should be repaid promptly on the agreed dates.
• The due dates for the repayment of the quarter instalments are 31st March, 30th June, 30th September and 31st December every year.
• The Scheduled Banks/FIs should also provide the loan to the borrowers at the same amount of rate of interest.
• The period for the repayment of the refinance should be ten years, excluding the 6 months grace period, from the date of disbursement of the fund.
• The institutions should pay the late fee of 12% per annum, apart from the regular 2% rate of interest, for any delayed payment beyond the due dates.
• If the banks failed to pay two-quarter instalments during the year, the IREDA may call off the refinance amount and request to refund it in a single payment.

Application Procedure

The following are the procedure to apply for the refinance under the scheme:

• The Scheduled Banks who are applying for the refinance should file their request with IREDA after fulfilling all their eligibility requirements.
• The application should include all the details such as eligible loan amount granted and other outstanding amounts under the scheme.
• The IREDA issues a confirmation and sanction receipt after the evaluation of the application form.
• On submission of the supportive documents and sanction receipt, the IREDA releases the fund to the eligible institutions.

Required Documents

The Scheduled Banks/Financial Institutions applying for the refinance under the scheme should furnish the following documents to the IREDA.

• A resolution certificate approved and issued by the Board of Directors or other committee members or any other Competent Authority should be submitted in favour of IREDA to execute the documents.
• Specimen signature of the authorities
• An agreement copy and other such documents as required by the IREDA in this respect.

Additional Conditions under the Scheme

• The Scheduled Banks may pull an agreement with the borrowers to ensure that the project should be operated for the next 3 years after the refinance with an average PLF of 40% in case of Biomass power projects and 25% for Small Hydro Power Projects.
• The Scheduled Banks should have proper records of pre and post disbursement of loan in order to keep track of the funds and avoid any delay in the repayment of loans.
• The priority is given to the older projects depending upon the date of commencement of projects.
• The Scheduled banks should submit the details of the projects for every six months to the IREDA.