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Loan for Improving Energy Efficiency – Bank of Baroda

Loan for Energy Efficiency

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.


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.


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).