India Banks Unleash Billions in Green Energy Loans: Renewable Sector Explodes!

Author

Satyam Jha | Whalesbook News Team

Detailed Coverage:

Indian banks are demonstrating strong bullishness towards the renewable energy (RE) sector, evidenced by a remarkable year-on-year increase in outstanding loans. As of September 2025, credit to the RE sector reached ₹14,842 crore, more than double the ₹6,778 crore recorded in September 2024. This growth rate significantly surpasses that of other key sectors like agriculture, MSMEs, and housing. Industry experts attribute this acceleration to robust project execution, spurred by favorable policy environments and GST reductions, which have enabled previously stalled projects to move into the implementation phase. Sachin Sachdeva of ICRA Ltd noted that this trend reflects healthy sector growth and significant capacity additions, with funding primarily directed towards under-construction projects. He also highlighted that infrastructure-focused NBFCs (NBFC-IFCs) in the RE space have seen their Assets Under Management (AUM) grow at a Compound Annual Growth Rate of approximately 30% over the last two years. Ramneek Sehgal of Ceigall India Ltd emphasized that the surge indicates accelerated project execution, especially in solar energy, driven by reduced solar module prices and increased domestic manufacturing. India is projected to add 42 Gigawatts (GW) of solar capacity in FY26. As of October 2025, India's total installed RE capacity (excluding large hydro) was around 2 lakh Megawatts (MW), with 27,927 MW added between April and October 2025. Experts like Vivek Jain from India Ratings and Research suggest the loan growth reflects a combination of under-construction and commissioned projects, and its persistence depends on the continued pace of project development. The rise in financing is seen more as a reflection of expanding execution activity rather than cost inflation, with input costs stabilizing and GST reductions helping optimize project costs.

Impact: This news indicates robust financial support and investor confidence in India's renewable energy transition. It suggests strong growth prospects for renewable energy companies and financial institutions involved in this sector, bolstering the nation's green energy targets. Rating: 8/10.

Difficult Terms: Renewable Energy (RE) Sector: The part of the energy industry that produces power from natural resources like sunlight, wind, and water, which are replenished naturally. Year-on-year (y-o-y): A comparison of data from one period to the same period in the previous year. RBI: Reserve Bank of India, India's central bank, responsible for monetary policy and financial regulation. MSMEs: Micro, Small, and Medium Enterprises, a crucial part of India's economy. GST: Goods and Services Tax, a consumption tax levied on the supply of goods and services. Project Execution: The process of carrying out and completing a planned project. NBFC-IFCs: Non-Banking Financial Companies - Infrastructure Finance Companies, financial institutions that provide loans for infrastructure projects. Assets Under Management (AUM): The total market value of assets that a financial institution manages on behalf of its clients. Solar Module: The fundamental unit of solar panels that converts sunlight into electricity. Giga Watt (GW): A unit of power equal to one billion watts, often used to measure electricity generation capacity. Mega Watt (MW): A unit of power equal to one million watts, also used for electricity generation capacity. Large Hydro Power: Electricity generated from large-scale hydroelectric power plants. Commissioned Projects: Projects that have been completed and are operational.