Loan for Improving Energy Efficiency - Bank of Baroda

Bank of Baroda is currently offering loans for improving energy efficiency in SME units in India. Bank of Baroda is one of the large banks in India.

Overview

The objective of the loan for improving energy efficiency is to finance SME businesses to improve energy efficiency in their operations. Hence, the scheme provides financing for acquisition of equipments, services and adopting measures for enhancement of energy efficiency or conservation of energy.

Eligibility

To be eligible for the scheme, the business must be a SME unit financed by Bank of Baroda. Other bank funded businesses can also shift accounts to Bank of Baroda to avail the scheme.

Amount of Loan

Loan of upto Rs.1 crore can be sanctioned under the scheme, subject to 75% of the total project cost. The minimum amount of loan is Rs.5 lakhs and the project cost may include the following:

Cost of acquisition/modification/renovation of equipment/software.
Cost of alterations to existing machinery.
Cost of structural / layout changes.
Cost of energy audit/consultancy.
Preparation of Detailed Project Report (DPR).

Interest rate of base rate plus 4.00% per annum is charged for the loan with a maximum 5 years repayment tenure, including moratorium period, if any.

Collateral Security

In case the applicant is an existing client with Bank of Baroda, then extension of first charge on all fixed assets is required. In case of consortium or multiple banking accounts, first charge on equipments acquired out of loan and collateral, if any, with the total security coverage being not less than 1.25 must be maintained.

Grant from IREDA

Indian Renewable Energy Development Agency Limited (IREDA) is a Mini Ratna (Category – I) Government of India Enterprise under the administrative control of Ministry of New and Renewable Energy (MNRE). IREDA provides financial support to specific projects and schemes for generating electricity and / or energy through new and renewable sources and conserving energy through energy efficiency. Thus, for loans sanctioned under this scheme, IRDEA, at present, gives a grant of Rs. 25,000/- for projects costing Rs. 1/- crore or below to meet partial cost of Energy Audit. This grant is available for the first 100 projects (SME Sectors only).

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Frequently Asked Questions

Common questions about Energy Efficiency Loan for SMEs in India.

The Loan for Improving Energy Efficiency scheme aims to provide financing to SME businesses to enhance their energy efficiency or conserve energy in their operations. The loan can be used to acquire equipment, services, and implement measures that improve energy efficiency.

Any SME unit that is currently financed by Bank of Baroda or businesses funded by other banks that are willing to shift their accounts to Bank of Baroda can apply for this loan.

Under the Loan for Improving Energy Efficiency scheme, a loan of up to Rs. 1 crore can be sanctioned, subject to 75% of the total project cost.

The project cost may include the cost of acquiring, modifying, or renovating equipment/software, alterations to existing machinery, structural or layout changes, energy audit/consultancy, and preparation of a Detailed Project Report (DPR).

The interest rate for the Loan for Improving Energy Efficiency scheme is the base rate plus 4.00% per annum. The maximum repayment tenure is 5 years, including any moratorium period.

If the applicant is an existing client with Bank of Baroda, an extension of the first charge on all fixed assets is required. For consortium or multiple banking accounts, a first charge on the equipment acquired through the loan and collateral, if any, with a total security coverage of not less than 1.25 must be maintained.

Indian Renewable Energy Development Agency Limited (IREDA) provides a grant of Rs. 25,000 for projects costing Rs. 1 crore or below to meet the partial cost of the Energy Audit. This grant is available for the first 100 projects in the SME sector.

Yes, businesses funded by other banks can apply for the Loan for Improving Energy Efficiency scheme by shifting their accounts to Bank of Baroda.

The minimum loan amount that can be sanctioned under the Loan for Improving Energy Efficiency scheme is Rs. 5 lakhs.

The Loan for Improving Energy Efficiency scheme is primarily targeted towards SME units operating in various sectors and industries in India. The article does not mention any specific sector or industry being targeted.