SIDBI partners with Shell Foundation for $6 million initiative to provide commercial EV loan
SIDBI announced its Mission 50,000-EV4ECO in April this year under guidance from NITI Aayog to fund MSMEs finding it difficult to access loans to purchase EVs such as two-wheelers, three-wheelers and four-wheelers for their day-to-day operations and commercial use. The mission aims to finance 50,000 EVs.
The risk-sharing facility shall be followed by scaling up support to the ecosystem from multilateral support for the EVOLVE programme. (image: Pexels)
Loan for Commercial EVs: Small Industries Development Bank of India, the principal financial institution for MSMEs in the country, and the UK-headquartered Shell Foundation, an initiative of the oil major Royal Dutch Shell working towards clean energy in Africa and India, on Thursday announced their partnership to launch Risk Sharing Facility (RSF) to support India’s EV Mission 30@30 through SIDBI’s mission of enabling ecosystem to foster 50,000 EVs. EV Mission 30@30 aims for 30 per cent EV penetration by 2030 in India.
The $6 million initiative including $3 million from SIDBI and $3 million from Shell Foundation will provide a partial credit guarantee to borrowers who use electric two and three-wheelers for commercial use. The agreed cap is 7.5 per cent of the second loss layer, which will unlock approximately $81 million of commercial capital for EV asset financing, said SIDBI in a statement.
Sivasubramanian Ramann, CMD, SIDBI said “In line with the national mission of EV30@30 SIDBI has adopted EV as a thrust segment. By launching mission 50K- EV4ECO we are promoting the entire EV value chain. We have witnessed that RSF is an important instrument to provide initial comfort to lenders, operating in emerging and underserved segments.”
Importantly, SIDBI announced its Mission 50,000-EV4ECO in April this year under guidance from NITI Aayog to fund MSMEs finding it difficult to access loans to purchase EVs such as two-wheelers, three-wheelers and four-wheelers for their day-to-day operations and commercial use. The mission aims to finance 50,000 EVs.
SIDBI noted that it has been conceptualising EV risk-sharing facility/financial products with the support of multilaterals after discussing with key stakeholders and experience gained in the sector. SIDBI has been operating two schemes – one for focused NBFCs operating in the EV space and the other for EV value chain actors/players and MSMEs.
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“Two development institutions, SIDBI and Shell Foundation, have come together to be the first mover and change maker for the commercial EV market. We expect that the Risk-sharing facility for EVs will address the lack of access and affordability of commercial financing due to actual and perceived risks associated with EV Lending,” Ramann added.
Also read: Sidbi offers 100 pc funding for MSME green projects
As per the release, the risk-sharing facility shall be followed by scaling up support to the ecosystem from multilateral support for the EVOLVE programme.
Jonathan Berman, CEO of Shell Foundation said,” The creation and launch of RSF facility will stimulate the EV Financing sector for 2W & 3W which are used as income generating assets. This will scale access to two- and three-wheeler electric vehicles for 50,000 urban transporters and empower them to increase their incomes by up to 70%.”
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