# What conditions does the Indian Renewable Energy Development Agency (IREDA) attach to loans under Component A and Component B of Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM)?

Canonical: https://senseible.earth/answers/ireda-kusum-component-a-and-b-loan-conditions

For Component A, IREDA wants a power purchase agreement (PPA) with the distribution company (DISCOM) that outlasts its loan, and enough land at every location before disbursement. For Component B it drops the mortgage, may waive monitoring agencies, and asks for an end-use certificate and a reserve of two quarters of interest.

## Component A: what IREDA asks for

- A PPA with the DISCOM, with a tenure longer than the IREDA loan tenure, 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.
- Security follows the IREDA norms for solar projects. On government land, assignment of a land user fee agreement may also be considered, where applicable.
- Eligibility is as per IREDA's general financing norms. Minimum loan amount, promoter contribution, quantum of loan, moratorium and loan period follow the norms for solar projects.
- Interest follows the prevailing IREDA matrix for rooftop solar, wind, grid-connected solar, hybrid wind and solar, and floating solar. The solar rebates apply, plus a further interest rebate printed in the document.

## Component B: what changes

- Eligibility follows the IREDA norms for project specific funding (PSF) loans. Minimum loan amount, promoter contribution and quantum of loan follow the norms for solar projects.
- Loan period and moratorium are decided case by case, from the project's cash flows and its debt service coverage ratio (DSCR).
- Securities follow the solar norms, except that the mortgage is not applicable.
- IREDA may appoint monitoring agencies and carry out site inspections. A monitoring agency may be waived where the DISCOM, the State implementation agency or the relevant government agency has created online project monitoring.
- An end-use certificate is obtained against project completion milestones set at appraisal.
- A no-objection certificate (NOC) is needed from existing working capital lenders, if there are any. Pre-sanction site visits are not mandatory.
- A debt service reserve account (DSRA) equal to the interest of two quarters, in step with disbursement, is obtained. Its timelines are set case by case.

## Who the Component B borrower is

In the same document, PSF loans are short and medium-term loans for renewable energy and energy efficiency suppliers, contractors and manufacturers, tied to a specific project or contract. My reading, not a line in the document: under Component B the borrower IREDA has in mind is the supplier or contractor carrying out the pump contract, not the farmer who receives the pump. Confirm this with IREDA.

## Individual pump solarisation under Component C

The document prints this as the same as Component B. It then adds a line saying a PPA with the DISCOM, with a tenure longer than the IREDA loan, should be available at processing. A PPA is an odd fit for a single pump, so ask IREDA whether that line applies to pump loans.

## What to have ready

1. Component A: a PPA whose tenure runs past the loan, and land papers for every location.
2. Component B: a milestone plan, because the end-use certificate follows the milestones set at appraisal, plus an NOC from any working capital lender.
3. Component B: find out whether the DISCOM or State agency runs online project monitoring, since that is what lets IREDA waive a monitoring agency.

## Example: the reserve account for a Component B loan

- Interest for one quarter, an example figure: rupees (Rs) 5 lakh
- Reserve of two quarters: 2 x 5 = Rs 10 lakh, which is Rs 0.10 crore

The quarterly interest figure is a round example, not a rate and not tied to any loan size. The document says the reserve follows disbursement and its timelines are decided case by case.

## What Senseible does here

Senseible reads fuel invoices and electricity bills into monthly records. It does not lend, and it does not prepare a lender's monitoring or completion papers.

- [Feeder solar loan: the two cash tests](https://senseible.earth/answers/ireda-feeder-solarisation-loan-dscr-tests)
- [Diesel pump to solar pump: emissions saved](https://senseible.earth/answers/diesel-pump-to-solar-pump-co2-saving)
- [IREDA in-principle sanction letter](https://senseible.earth/answers/ireda-in-principle-loan-sanction)
- [Green loan schemes for MSMEs](https://senseible.earth/msme-green-loan-schemes)

Sources: [IREDA, Financing Norms and Schemes, issue 35, updated up to 01.10.2026: policy on loans under PM-KUSUM (Components A, B and C), project specific funding loans](https://www.ireda.in/IredaWebPortal/documents/loan-products/financing-norms-01-10-2026.pdf)

Last reviewed 2026-11-05. The PM-KUSUM policy was amended on 9 December 2025 and IREDA reissues its norms often. Check the current issue before you apply. The document does not name what Component A and Component B fund, so this page does not either.