NBFCs Leading the Way in Financing C&I Solar Projects for MSMEs in India

India’s MSME sector is a crucial component of the country’s economy, and the adoption of rooftop solar can play a significant role in reducing energy costs and increasing sustainability. However, financing remains a major challenge for many MSMEs looking to invest in solar energy. To address this challenge, specialised non-banking financial companies (NBFCs) have formed strategic partnerships to develop and scale commercial rooftop solar finance solutions.

One such partnership is between Tata Power and the Small Industries Development Bank of India (SIDBI). In January 2021, the two companies announced their partnership to offer easy and affordable financing for MSME customers in the rooftop solar segment. The loan is available exclusively for Tata Power customers for both on- and off-grid applications, with a claimed turnaround time of seven days and disbursement in four days. For non-Tata Power customers, SIDBI offers its rooftop solar loan.

Another partnership aimed at promoting rooftop solar adoption in the SME segment is the US$41 million loan portfolio guarantee sponsored by the U.S. International Development Finance Corporation (DFC) and the U.S. Agency for International Development (USAID), which began in March 2021. DFC and USAID have partnered with the New York-based Encourage Capital, an environment-focused investment firm, and two Indian NBFCs, cKers Financial and Electronica Finance Limited (EFL). Encourage Capital has invested US$15 million in EFL, which will use the funds to provide loans to SMEs for rooftop solar installations.

These partnerships are crucial for enabling MSMEs to access financing for rooftop solar installations, which can help reduce energy costs and increase sustainability. The partnerships between NBFCs and solar developers enable MSMEs to switch to rooftop solar without any collateral at an interest rate of less than 10%. The quick turnaround time and disbursement period also help ensure that MSMEs can access financing when they need it.

In conclusion, the partnerships between NBFCs and solar developers offer an innovative financing solution for MSMEs looking to invest in rooftop solar installations. These partnerships provide MSMEs with easy and affordable financing options and help reduce the barriers to entry for rooftop solar adoption in the SME segment. The initiatives taken by NBFCs and solar developers will help India achieve its renewable energy targets and drive the country towards a more sustainable future.

NBFCs active in solar financing in India, along with their references: