Can a non-banking financial company (NBFC) borrow from the Indian Renewable Energy Development Agency (IREDA) to lend to green projects, and what must it show?
IREDA's line of credit goes to NBFCs and state financial institutions rated at least A+, with Reserve Bank of India (RBI) registration if private. They need rupees (Rs) 20 crore of green loans in the last year or five years of experience, three profitable years, and a debt to equity ratio of 5:1 or less.
What the line is for
IREDA's line of credit lets eligible NBFCs and State government financial institutions and corporations borrow for on-lending to renewable energy projects, energy efficiency and conservation projects and the electric mobility segment. My reading: an MSME does not apply to IREDA for it. The MSME borrows from the NBFC, which may have funded that lending partly from IREDA.
What the lender must show
- A rating of at least A+. A private sector lender must also have valid RBI registration.
- Either green loans of at least Rs 20 crore disbursed in the last financial year, in renewable energy, energy efficiency and conservation or electric mobility including new areas such as green hydrogen, or at least 5 years of experience while entering this segment.
- Profit in each of the last three financial years and no accumulated losses.
- Capital adequacy in line with RBI norms.
- Gross non-performing assets (NPA) not normally above 5% of the portfolio.
- Debt to equity of no more than 5:1. A higher ratio can be considered against a bank guarantee or fixed deposit receipt for 100% of the loan amount from a scheduled commercial bank.
- Adequate systems for appraisal and recovery of loans.
Terms printed in the scheme
- Repayment 10 years plus a 1-year moratorium. My reading: 11 years in all.
- First disbursement within 1 year of the loan agreement, and full disbursement within 1 year of the first.
- Mode of disbursement is reimbursement or on-lending. On-lending mode applies only to NBFCs in the electric vehicle segment.
- Security is a charge on the NBFC's book debts up to 100% of the IREDA loan outstanding, or other securities under the norms. For scheduled commercial banks the book debt charge may be exempted.
- Financial covenants such as net NPA, debt to equity and profitability are set at appraisal, with compliance reported preferably each quarter and at least once a year, backed by an auditor certificate.
A note on electric vehicles
The scheme's heading names the electric mobility segment, and on-lending mode is limited to electric vehicle lending. Separately, IREDA put funding of the green mobility segment under its new technologies policy on hold on 25 March 2026. That hold is written against the new technologies policy, not this line. My reading: ask IREDA whether this line is open for electric vehicle lending today.
Example: two of the lender tests
- Net worth Rs 200 crore: at 5:1 debt to equity, borrowings of up to 5 x 200 = Rs 1,000 crore
- Loan portfolio Rs 1,500 crore: gross NPA normally not above 5%, which is 1,500 x 0.05 = Rs 75 crore
The lender figures are examples. The document says the 5% is a normal ceiling, not an absolute one.
What Senseible does here
Senseible reads fuel invoices and electricity bills into monthly records. It does not lend or arrange credit lines, and it does not know which lenders hold an IREDA line.
- Can an NBFC lend me green deposit money?
- IREDA green mobility loans on hold
- Blended finance for small businesses
- Green loan schemes for MSMEs
Last reviewed 2026-11-05. Eligibility and the electric mobility position are reissued with each issue of the norms. Check the current issue before assuming a lender holds a line.