What security does the Indian Renewable Energy Development Agency (IREDA) ask for on a loan, in plain words?
IREDA asks for a first claim on what the project owns. Land and buildings go under a mortgage. Machines, stock and incoming money are covered by a pledge (hypothecation). A special account collects the project's receipts and an auto-debit mandate is asked for. Extra security can be added on top.
Security is what the lender can take if payments stop
Security is the thing a lender can sell to get its money back if you stop paying. Think of a pawn shop: you hand over something of value and it comes back once you have repaid. A project loan works the same way, except that what you pledge is the project itself.
The financing norms of the Indian Renewable Energy Development Agency (IREDA), updated up to 1 October 2026, split it in two: primary security, which the general norms ask of projects, and additional security, which IREDA may add when it wants more comfort.
Primary security, item by item
- Mortgage. A first charge on all the immovable property of the project, present and future. In plain words, land and buildings, with IREDA first in the queue to be paid from them. If the property is leased, the norms say the lease rights are mortgaged or assigned instead.
- Hypothecation. A first charge on the project's movable things: machines, spares, tools, furniture and vehicles. It also covers the project's stock, receivables and income, and the bank accounts that belong to the project. In plain terms, you keep using all of it. The charge only says IREDA is first in line if there is a default.
- Rights in the paperwork. IREDA also takes the benefit of the project's government approvals, contracts, insurance policies and guarantees, such as a power purchase agreement. The norms cover them both inside the hypothecation and through a separate assignment by a legal paper called an Indenture of Mortgage (IOM).
- A Trust and Retention Account (TRA). The norms say it is for deposit of project receivables. In plain words, the money your buyers pay goes into a controlled account first.
- A Debt Service Reserve Amount (DSRA) "as per requirement". In plain words, a cushion of money kept aside to pay instalments if income dips. Section 5.3 prints no size; the reserve sizes are set in section 6 of the norms. Ask IREDA what yours will be.
- An auto-debit instruction to your bank for each instalment, called a National Automated Clearing House (NACH) mandate (our plain reading).
What smaller borrowers do differently
For companies borrowing up to rupees (Rs) 50 crore, for self-captive projects and for Micro, Small and Medium Enterprise (MSME) borrowers, the norms let you give an undertaking to sign the IOM assignment later, whenever IREDA asks. (A lakh is 100,000 and a crore is 10 million. Self-captive means a project that produces for its own owner's use, in our reading.)
In return, the norms ask for Rs 20 lakh as a bank guarantee (BG) or fixed deposit receipt (FDR), kept with IREDA as a security deposit towards the registration cost of the IOM.
Extra security on top
- Mortgage of a spare property, called collateral. IREDA wants two approved valuations of it, and the page linked below explains how they are used.
- Personal guarantees, corporate guarantees, or both, as applicable.
- A pledge of shares.
- Other additional security, which the norms say IREDA may stipulate, such as a BG, FDR or term deposit receipt (TDR), or an extension of its charge on other existing project assets, based on the requirement.
Read your own sanction letter against this list
These are the general norms. The scheme sheets inside the same document, for example for biomass pellet plants or compressed biogas, carry their own security lists. Our reading is that the sanction letter you receive is what binds you, so read its security clause line by line and ask IREDA about anything that differs from this page.
Example: a small biomass pellet unit, matched to the list
- Land and shed of the unit: under the mortgage
- Pellet press, dryer and delivery truck: under hypothecation
- Payments from pellet buyers: paid into the TRA before they reach you
- Question to settle early: is there a spare property to value, or will a bank guarantee cover the gap until the property is mortgaged?
Example only. It shows how the list reads for one kind of unit, not what IREDA will ask of any real borrower.
What Senseible does here
Senseible reads fuel invoices and electricity bills into monthly records, so the energy your plant buys is on file when a lender asks what the project costs to run. It does not value property, arrange security or decide a loan. Senseible can pass verified records to financing partners. The partner decides. Nothing is promised.
- Green loan readiness check
- Green loan schemes compared
- How IREDA values collateral property
- Bank guarantee until the mortgage is ready
- IREDA loan terms for a biomass pellet plant
Last reviewed 2026-11-07. Wording follows IREDA's financing norms updated up to 1 October 2026. Plain-words explanations and the reading of 'self-captive' are ours. IREDA revises its norms, so check the current issue and your own sanction letter.