Sustainable Finance Scheme (SFS)

SIDBI has introduced a new scheme called the Sustainable Finance Scheme for funding sustainable development projects that contribute energy efficiency and cleaner production but not covered under the international or bilateral lines of credit. All sustainable development projects such as renewable energy projects, Bureau of Energy Efficiency (BEE) star rating, green microfinance, green buildings and eco-friendly labelling, etc. are applicable for the scope of this scheme. Moreover, financial assistance has been provided to Energy Service Companies (ESCOs) and Original Equipment Manufacturers (OEMs) that are engaged in the manufacturing energy efficient and cleaner production equipment.

Objective of the Scheme

The following are the main goals of the Sustainable Finance Scheme.

According to the definition laid down by the MSMED Act 2006, new/ existing MSME units would be eligible for assistance under the scheme.
Existing units must have a satisfactory track record of the past performance and sound financial position and should not be in default to institutions/ banks.
The units 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, biomass gasifier power plants, etc. for captive/ non-captive use.
Any potenatial 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 a substantial number of MSMEs.

Scheme Overview

The scheme develops the entire value chain of energy efficiency (EE)/ cleaner production (CP) and sustainable development projects that lead to necessary improvements in EE/ CP/ sustainable development in the MSMEs that presently not covered under the viable financing lines of credit.

Rate of Interest

The rate of interest applicable would be the standard lending rate by the credit rating of MSMEs.

Activities Eligible for Assistance

Here are the activities that are eligible for assistance by the scheme.

Renewable energy projects such as solar power plants, wind energy generators, mini hydel power projects, biomass gasifier power plants, etc. for captive/ non-captive use.
Any kind of potential CP investment that includes waste management.
Green microfinance that offers microloans that are up to Rs. 5 lakh to micro enterprises for green/ energy efficient equipment measures.
Expenditure on energy sudit/ environment compliance audit/ pollution control and management consutancy services.
The expenditure made on green rating, eco-friendly labelling, BEE star rating, etc.
ISO 50001/ 14000 or other accredited energy/ environmental certification.
CDM registration about expenditure.
Suitable assistance to OEMs that manufacture energy efficient/ cleaner production/ gree machinery/ equipment. The aid could be made either in the form of Deferred Payment Guarantees, Channel Partner/ Referral arrangement, etc. Either the OEM has to be an MSME, or it has to supply its products to a substantial number of MSMEs.

Eligibility Criteria

The acceptable standards for this scheme are as follows.

Renewable energy projects like solar power plants, wind energy generators, mini hydel power projects, biomass gasifier power plants, etc. for captive/ non-captive.
Any potential CP investments that include waste management.
Suitable assistance to OEMs that manufactures energy efficient/ cleaner production/ green machinery/ equipment. Either the OEM has to bean MSME, or it has to be supplying its products to a substantial number of MSMEs.

Fiscal Incentives

Suitable assistance using term loan or working capital is granted to the ESCOs that implements EE/ CP/ Renewable Energy Project. To be eligible for this grant, the ESCO must be an MSME or otherwise the unit to which it renders its services has to be an MSME.