Can the Indian Renewable Energy Development Agency (IREDA) refinance the term loan on my commissioned project, and what must the project show?
IREDA has a refinancing policy for commissioned projects that are standard assets with every lender and not in default. Projects under two years old need an external rating of at least A-. Older ones need investment grade and a past debt service coverage ratio (DSCR) of at least 1.05 for solar and wind.
Who the policy is for
- The entire project must have reached its commercial operation date (COD) when the application is made.
- The entity must not be in default to any bank, financial institution or non-banking financial company, IREDA included.
- The loan must be a standard asset in the books of all lenders on the date of application.
- Average and minimum DSCR for the new loan period must meet the limits in IREDA's guidelines. The document adds that fundamental viability is established from other financial and non-financial parameters showing capacity to service and repay over the tenor.
Two tracks by project age
- COD less than 2 years ago: minimum external rating of the project or portfolio of A-. Financial projections use generation after a stabilisation year of one year. If COD is under a year ago, estimated generation from the resource assessment is used.
- COD more than 2 years ago: minimum external rating of investment grade. Projections use average generation of up to the last 5 years, leaving out the first year of operation. Past year-on-year DSCR for up to the last 5 years must be at least 1.05 for solar and wind projects, and at least 1.10 for other projects.
What the policy will not do
- IREDA will not consider this scheme where the borrower seeks fresh help from IREDA to prepay or replace a facility IREDA itself sanctioned.
- Refinancing another lender's loan on a project where IREDA is already a lender can be considered as a new business proposal under this policy. IREDA then carries out an integrated rating or re-rating, and any better rating applies to the original and the additional debt.
- Repayment is set from the project's life cycle and cash flows. Normally there is no moratorium on repayment or interest.
Papers and consents
- Consent from the lenders whose debt is being refinanced, before disbursement begins. The document says this may be obtained under the terms of the Common Loan Agreement (CLA).
- Confirmation of the outstanding balance from each bank or institution being refinanced, before disbursement begins.
- Compliance with every condition for refinancing in the CLA, the terms of sanction and the trust and retention account agreement.
Why the document defines financial difficulty
The policy prints definitions of restructuring and financial difficulty, in the style of the Reserve Bank of India (RBI) rules. A default counts as an indicator of financial difficulty whatever the reason, and so do a probable default without a concession, cash flows judged insufficient to service all debt, and non-performing status. My reading: a refinancing that looks like a rescue of a struggling borrower is a different matter from this policy.
Example: two tests for a 5-year-old solar plant
- Generation: year 1 is left out. Years 2 to 5 are 2,000 + 1,950 + 2,050 + 2,000 = 8,000 megawatt hours (MWh). Average = 8,000 / 4 = 2,000 MWh a year.
- Past DSCR by year: 1.12, 1.08, 1.06, 1.10, 1.09. Every year is at least 1.05, so the solar test passes.
- Past DSCR by year: 1.12, 1.08, 1.04, 1.10, 1.09. Year 3 is below 1.05, so the test fails.
Generation and DSCR figures are examples. The document says "Past year on year DSCR of upto last 5 years to be minimum 1.05". This page reads that as each year, not only the average. Confirm with IREDA.
What Senseible does here
Senseible reads fuel invoices and electricity bills into monthly records. It does not lend, rate projects or negotiate with lenders.
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Last reviewed 2026-11-05. Ratings, DSCR floors and consents are reissued with the norms. Ask IREDA for the current issue. The document's own text for 'COD more than 2 years' is printed with some lettering errors; the thresholds above are as read.