Top three banks working with govt on funding rules for green H2 projects
State Bank of India, HDFC Bank, and ICICI Bank, along with the government, are drawing up a financing framework for green hydrogen projects, people with knowledge of the matter told ET.
The framework will lay down guidelines for credit appraisal, risk assessment, and concessionary finance to make assessment of such projects easier for banks and aid credit flow to the sector, they said.
«A committee is being set up that will have representation from all stakeholders, including industry, and based on the recommendations, a lending framework for the sector will be worked out that will help bring more funding to the sector,» an official said. The committee will work under the aegis of the Ministry of New and Renewable Energy (MNRE), the person said.
A common framework will also help in consortium lending where foreign lenders including multilateral institutions can participate as various parameters such as project appraisal and post-disbursement supervision will be clearly defined, helping in faster loan sanctions, a bank executive said.
The European Investment Bank is already exploring a partnership with state-run Indian Renewable Energy Development Agency (Ireda), a non-banking finance company (NBFC), for financing green hydrogen projects.
A preliminary meeting on the issue of a lending framework was held in November, another official said. «These three banks have been nominated and will soon give their recommendations,» he said.
Issues regarding financing for the National Green Hydrogen Mission (NGHM) will also be looked at by this new committee, the official said. Launched in January 2023, NGHM has a total outlay of ₹19,744 crore.
A senior executive with SBI confirmed the development but did not elaborate.
