PNB’s solar rooftop financing scheme

The Government of India has set an ambitious target of installation for Grid Connected Rooftop Solar Photovoltaic projects for 40 GW out of the total target of 175GW .

PNB has availed a line of credit of $ 500 Million from Asian Development Bank for financing Rooftop Photovoltaic Solar Power Projects.

Mentioned below are the details for the scheme that has been formulated by the bank.

Target Group: Sole proprietorship firms, partnership firms including Limited Liability Partnership (LLP), Limited Companies, Private Limited companies, Trusts, Associations, Special Purpose Vehicle(SPV), Non-Banking Finance Companies( NBFCs) and Registered Societies.

Margin: Minimum of 30% with a suitable upfront contribution of the required margin.

(Margin is the money borrowed from a broker to purchase an investment and is the difference between the total value of investment and the loan amount.

If you have an initial margin requirement of 30% for your margin account, and you want to purchase 10,000 worth of securities, then your margin would be 3,000, and you could borrow the rest from the broker

Type of Facility:

1. Term Loan: Need Based

1. Working Capital under Receivables: Need Based

   3. Non Fund Based (Letter of Credit/Letter of Guarantee): Need Based

   Pricing

   Minimum of One Year MCLR i.e.@8.35% p.a. at present up to a maximum spread of 30 to 50 bps based on the risk rating of the borrowing firm/company.

   -The marginal cost of funds-based lending rate (MCLR) is the minimum interest rate that a bank can lend at. MCLR is a tenor-linked internal benchmark, which means the rate is determined internally by the bank depending on the period left for the repayment of a loan.

Fixed Asset Coverage Ratio(FACR) in a year: Minimum 1.25

This  shows  the  number of times the  value  of  fixed  assets   (after  providing  depreciation)  covers   term   liabilities.Fixed Assets Coverage Ratio = Net Fixed Assets/Long/Medium Term Debts

This should be more than 1.

Loan Repayment Period :

Door to Door tenor of maximum 15 years which comprises construction / installation, moratorium and repayment period.

Moratorium:

1 year after 1st disbursement or 4 months from COD, whichever is earlier.
It is basically a length of time during which you enjoy a holiday from your home loan EMIs. This means that you do not have to start repaying your home loan as soon as your loan gets disbursed to you.

Collateral Security:

The term collateral refers to an asset that a lender accepts as security for a loan. Collateral may take the form of real estate or other kinds of assets, depending on the purpose of the loan. The collateral acts as a form of protection for the lender. That is, if the borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or all of its losses.

1.Loan for Rooftop Solar Project to MSME up to Rs 10 lakh shall be without collateral security as per Govt. Guidelines.

2. For others: Notwithstanding the security stipulated , the sanctioning authority may where it is deemed necessary, on a case to case basis may stipulate such collateral security as required.

Guarantee

A personal guarantee is a signed document that promises to repay back a loan in the event that your business defaults. Collateral is a good or an owned asset that you use toward loan security in the event that your business defaults.

Personal guarantee of proprietor/ partner/ director to be obtained. In case of SPV corporate guarantee of Promoter Company shall be explored.

Debt Service Reserve Account (DSRA):
is a reserve account used to pay interest and principal amounts of debt. The DSRA is very important when the cash flow available for debt services (CFADS) is below the necessary amount to make the payments. In the case of a credit agreement, the lender will more than likely impose a clause that requires a DSRA, with a balance that must be periodically restored to a minimum amount. The minimum amount is often contingent on the amount of interest and principal remaining.

DSRA equivalent to minimum of 3 months’ principal and interest) to be maintained after the date of commercial operations

Statutory Clearances and PPA
The required project agreements (including PPA)/ clearances/ approvals should be in place, before disbursement of 1st tranche for each individual loans under the overall sanctioned credit facility.