Tata Power Partnered With SIDBI to Offer Collateral Free Solar Loans to MSMEs

The MSME sector plays a major role in the Indian economy and is one of the largest consumers of energy. The MSME sector is expected to contribute greatly to achieving the government’s target of building 40 GW of rooftop solar capacity by 2022. However, the adoption and growth of MSME rooftop solar in the MSME sector in India is yet to pick up. Scaling up rooftop solar in the MSME sector in India needs addressing various issues such as the lack of low-cost financing. Financial institutions are often unwilling to lend to MSMEs because they prefer borrowers with strong financial track records and good corporate credit ratings.

MSME sector is largely untapped and it has the potential to drive large-scale rooftop solar adoption in India if accessible financing were made easily available to them. MSMEs face many obstacles in obtaining financing for rooftop solar installations, including insufficient credit history, lack of collateral and long-term uncertainties in their businesses.

The dearth of affordable and accessible financing is one of the major hurdles to rooftop solar installation in the MSME sector. To address this issue Tata Power has partnered with the Small Industries Development Bank of India (SIDBI) to offer affordable and accessible financing for MSME rooftop solar program. Tata Power and SIDBI devised a collateral-free financing solution at an interest rate of less than 10%. Loans will get approved within 7 days and disbursed in 4 days. This financing option is exclusively available for customers of Tata Power for off-grid and on-grid installations.

Sufficient support to MSMEs becomes important from the point of view of accelerating the growth of rooftop solar amongst MSMEs. Suprabha’s program aims to design a mitigating product or a framework that enables greater lending to MSMEs for the uptake of rooftop solar.