The Cabinet cleared equity infusion of Rs 1,500 crore into IREDA (Indian Renewable Energy Development Agency) to boost its lending capacity as the government targets ssetting up of 450 GW green energy capacity as part of fulfilling its COP26 net-zero promise.
The equity infusion will enhance IREDA’s net worth, boosting the agency’s lending capacity to Rs 12,000 crore. This amount will be good enough for financing up to 4,000 MW of additional renewable capacity. This will lead to a reduction in carbon emission of more than 7 million tonnes CO2 per year.
IREDA’s portfolio increased from Rs 8,800 crore to Rs 28,000 crore in the last six years. But according to RBI norms, loans can be extended on 20% of the agency’s net worth. This rule capped IREDA’s financing capacity to Rs 600 crore as its net worth is Rs 3,000 crore.
The additional equity will also improve the capital-to-risk weighted assets ratio (CRAR), which will facilitate its lending and borrowing operations, according to a government statement.