Small Industries Development Bank of India or SIDBI has introduced a new scheme called the Sustainable Finance Scheme for funding sustainable development projects that contribute to safer and cleaner production and manufacturing practices that contribute to energy efficiency too.
Various development projects such as Renewable energy projects, the Bureau of Energy Efficiency (BEE) star rating, Green Microfinance, Green buildings, and eco-friendly labeling are all applicable for the scope of the Sustainable Finance scheme.
The Objective of the Scheme
- The main objective of the SFS is to provide a satisfactory track record of the past performance and sound financial position which should not be in default to any institution or bank.
- The units that are produced should have a minimum credit rating of investment grade or its equivalent, according to the internal credit rating model.
- Renewable energy projects such as solar power plants, wind energy generators, mini hydel power projects, etc are to be covered for either captive or non-captive use.
- Any potential CP investments that include waste management
- Suitable assistance to OEMs that manufacture energy-efficient / cleaner production / green machinery/equipment. Further, the OEM has to be an MSME or it has to supply its products to an adequate number of MSMEs.
The Rate of Interest
The Rate of Interest applicable to the SFS would be the standard lending rate by the credit rate of MSMEs.
Offering a platform for the ease of business for energy-efficient or greener machinery definitely leads to a cleaner future. We may have inherited a flawed construct that is eating up the planet. With the SFS, we may be looking at a change.
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