When does the interest rate on an Indian Renewable Energy Development Agency (IREDA) loan get reviewed, and what are its five risk grades?

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IREDA prices private sector borrowers by a risk grade from Grade I to Grade V, and its rates are linked to the grade. The rate is reset at commissioning or one year after first disbursement, whichever is earlier, then every year. From commissioning on, IREDA re-rates the project on reset dates, and a borrower can ask for one in between. A grade is a risk score the lender gives your project, like a school report that sorts pupils into bands. The norms of the Indian Renewable Energy Development Agency (IREDA) say it conducts credit rating for all grid connected projects and gives grading in a band of five grades, I, II, III, IV and V, based on the risk assessment. The interest rates are linked with the grades. The norms print no rule here for how the grades are scored. The rate table prices private sector borrowers by Grade I to V, including rows for off-grid solar, rooftop solar and energy efficiency. Public sector borrowers are priced by external or published credit rating instead. The norms do not say how off-grid projects are scored. This page quotes no rates, because the rate table changes; read the table in the current norms. The interest rates are fixed by a Committee for fixing interest rates from time to time, based on market conditions. New rates apply to new sanctions and to disbursements on or after the effective date. They also apply to existing loan accounts from their next reset of interest date on or after that date. The rate is subject to reset on commissioning of the project, or one year from the date of first disbursement, whichever is earlier. After that, it resets every year. If the project was commissioned before the first disbursement, the first reset is one year from the date of first disbursement. IREDA carries out re-rating of the project on its own on interest reset dates subsequent to the commissioning date (including the reset on commissioning), so a reset before commissioning is not covered by that line. A borrower can ask for a re-rating at any other time, for a fee. The norms say reset periods are subject to change. If a borrower defaults on principal or interest and the loan is classified as a Non-Performing Asset (NPA), a loan that has stopped being repaid as agreed, and the project had been given a grade better than Grade V at sanction, the norms say the rate charged is the Grade V rate of the sector at the time of default, or the rate applicable at sanction or reset, whichever is higher. The higher rate is charged until the loan is upgraded to the standard category. Separately, an additional interest charge applies until commissioning in sectors other than wind and solar. The norms list exceptions, including loans for manufacturing facilities.

When does the interest rate on an Indian Renewable Energy Development Agency (IREDA) loan get reviewed, and what are its five risk grades?

Grades in plain words

Who sets the rates

When your rate is reset

What happens if you default

Example: two dated cases

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