How does the Indian Renewable Energy Development Agency (IREDA) test a feeder-level solar loan under Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) Component C?
IREDA appraises a feeder-level solar loan twice: once with the central financial assistance (CFA) counted as cash, and once in a stress case without it. Without CFA the minimum debt service coverage ratio (DSCR) must be at least 1.03 and the average at least 1.15, or 1.01 and 1.10 with extra security. It sanctions only if both cases pass.
Where this rule sits
IREDA's Financing Norms and Schemes, issue 35, updated up to 1 October 2026, carry a separate policy for loans under PM-KUSUM, with its own rules for Component A, Component B and Component C. Under Component C the document splits feeder-level solarisation from individual pump solarisation. Individual pump solarisation is printed as the same as Component B, so this page covers only the feeder-level rules.
The document's revision table lists an amendment of this policy on 9 December 2025, described as an update to the PM-KUSUM financing norms and to the operational guidelines on collateral and additional securities. Read the figures below as printed in the October 2026 issue.
The two cases IREDA runs
- With-CFA case: the CFA is counted as part of the project's cash flow, following the milestone-linked release mechanism of the Ministry of New and Renewable Energy (MNRE). The document adds that IREDA may count CFA inflows according to its experience in projects it has already funded. The minimum and average DSCR must then meet the norms for solar projects in the same document.
- Without-CFA stress case: minimum DSCR of at least 1.03 and average DSCR of at least 1.15.
- Exception printed in the document: projects with a minimum DSCR of at least 1.01 and an average of at least 1.10 may also be considered, with additional security in the form of a bank guarantee (BG) or fixed deposit (FD). The amount of that BG or FD is decided case by case.
- The document says projects will be sanctioned only if they meet both the with-CFA case and the without-CFA stress case.
Security around the grant
- Primary security follows the solar project norms. On government land, assignment of a land user fee agreement may also be considered, where applicable.
- Additional security follows the solar norms, along with any of the following as required: an assignment or charge on CFA receivables, or a BG or fixed deposit receipt (FDR) for an amount not less than the incremental loan required to meet the minimum and average DSCR requirements without CFA.
- The BG or FDR is released only when an equal amount of CFA reaches the trust and retention account (TRA) and all stipulated securities are in place to IREDA's satisfaction.
- My reading, not the document's words: the guarantee covers the slice of the loan that passes only when the grant is counted, and it comes back when the grant arrives.
Other conditions printed for feeder-level loans
- A power purchase agreement (PPA) with the distribution company (DISCOM), with a tenure longer than the IREDA loan, should be available when the proposal is processed, or as a pre-commitment condition.
- Sufficient land should be available for each location before disbursement, as per the Reserve Bank of India (RBI) Project Finance Directions, 2025.
- CFA, if available, may be apportioned in the ratio of debt to equity.
- Maximum debt, loan period and moratorium follow the solar norms; interest follows IREDA's interest rate matrix.
What to ask before you plan around the grant
- Ask for the with-CFA and without-CFA cash flows side by side, so you can see which test is tighter.
- Ask how much of the loan the without-CFA case supports. That gap sets the size of any BG or FDR.
- Check that the PPA tenure runs past the loan tenure before you sign.
- Ask how the grant will be split between debt and equity.
Example: one project through both tests
- Debt service due each year: rupees (Rs) 1.00 crore
- Cash available each year without CFA is Rs 1.20 crore: DSCR = 1.20 / 1.00 = 1.20. That is at least 1.03 for the minimum and at least 1.15 for the average, so it passes the stress case.
- Cash available without CFA is Rs 1.10 crore: DSCR = 1.10. That is below the average of 1.15 but meets the 1.01 and 1.10 exception, so IREDA may consider it with a BG or FD.
- Cash available without CFA is Rs 1.00 crore: DSCR = 1.00. That is below 1.01, so it fails.
- CFA split: Rs 1.00 crore of CFA on a 70:30 debt to equity project puts Rs 0.70 crore to debt and Rs 0.30 crore to equity.
All figures are examples. Each year is held equal so the minimum and the average are the same number; a real project varies by year. DSCR here means cash available for debt service divided by debt service due, in plain terms.
What Senseible does here
Senseible reads fuel invoices and electricity bills into monthly records. It does not lend, does not build a lender's cash flow model and does not decide a sanction.
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Last reviewed 2026-11-05. IREDA reissues its norms often, and the PM-KUSUM policy was amended on 9 December 2025. Check the current issue and ask IREDA before relying on a threshold. The DSCR figures are as printed. IREDA's text does not spell out CFA, so the expansion "central financial assistance" is this page's own; the document prints only "TRA account", so that expansion is too; the grant amount and release timing come from MNRE's scheme rules, which this page does not cover.