0 évaluation0% ont trouvé ce document utile (0 vote)
222 vues40 pages
A Guide for solar financing procedures with Regional Rural Banks and Other Institutions
The predominant reason for solar technology not to flourish is the inability to facilitate the appropriate form of financing for the same. SELCO has over eighteen years followed the below approach in order to overcome this scenario: This is the normal approach when solutions are provided in cities and other well-served towns. But in remote and under-served regions, the tendency is to distribute the cheapest products without any effort being put in to study the best and sustainable solution, often for fear of the effort not being profitable. One of the key factors that can bring about a change in this mindset is to learn about the different options of financial linkages available or that can be created in remote and under-served areas. SELCO has, by utilizing financial linkages available in Karnataka, run as a commercial entity with social objectives very sustainably since 1995. This manual, which has used the extensive experience of SELCO, aims to help all the parties concerned, the system provider, end user and the finance provider to understand and utilize financial linkages to bring light and power to energy deprived areas of the country.
Titre original
Financing for Off-grid Solar Home Lighting Systems
A Guide for solar financing procedures with Regional Rural Banks and Other Institutions
The predominant reason for solar technology not to flourish is the inability to facilitate the appropriate form of financing for the same. SELCO has over eighteen years followed the below approach in order to overcome this scenario: This is the normal approach when solutions are provided in cities and other well-served towns. But in remote and under-served regions, the tendency is to distribute the cheapest products without any effort being put in to study the best and sustainable solution, often for fear of the effort not being profitable. One of the key factors that can bring about a change in this mindset is to learn about the different options of financial linkages available or that can be created in remote and under-served areas. SELCO has, by utilizing financial linkages available in Karnataka, run as a commercial entity with social objectives very sustainably since 1995. This manual, which has used the extensive experience of SELCO, aims to help all the parties concerned, the system provider, end user and the finance provider to understand and utilize financial linkages to bring light and power to energy deprived areas of the country.
A Guide for solar financing procedures with Regional Rural Banks and Other Institutions
The predominant reason for solar technology not to flourish is the inability to facilitate the appropriate form of financing for the same. SELCO has over eighteen years followed the below approach in order to overcome this scenario: This is the normal approach when solutions are provided in cities and other well-served towns. But in remote and under-served regions, the tendency is to distribute the cheapest products without any effort being put in to study the best and sustainable solution, often for fear of the effort not being profitable. One of the key factors that can bring about a change in this mindset is to learn about the different options of financial linkages available or that can be created in remote and under-served areas. SELCO has, by utilizing financial linkages available in Karnataka, run as a commercial entity with social objectives very sustainably since 1995. This manual, which has used the extensive experience of SELCO, aims to help all the parties concerned, the system provider, end user and the finance provider to understand and utilize financial linkages to bring light and power to energy deprived areas of the country.
SOLAR HOME LIGHTING SYSTEMS A GUIDE FOR SOLAR FINANCING PROCEDURES WITH REGIONAL RURAL BANKS AND OTHER INSTITUTIONS SELCO Incubation Centre 3 Eighteen years of SELCOs innovation is entirely dedicated to the sta members who have continuously improvised and experimented on making solar technology aordable / maintained / utilized by the under-served communities. If not for the drive of the SELCO sta members we would not have been able to see how a technology which is nearly ve or ten times a familys income or rather the second highest investment in their life after their house can be utilized by them. We dedicate the series of manuals comprising of Solar Technology, Sales & Marketing and Financial linkages for solar products which documents SELCOs work, to all of its sta members which has reached 220+ individuals. We thank the training team at SELCO headed by Jagdeesh Pai & Sudhir Kulkarni for their guidance on the structure of the manual. We also thank our colleagues Sathyanarayan B, Ramanath N Dixit (consultants for nancial institution relationships Acknowledgements at SELCO both former bankers and hence have pertinent observations on the schemes operative and the procedures for the same) and Surabhi Rajagopalan (part of the SELCO Foundation managing the policy initiative). We would like to thank Sameera Mushini, a graduate from Institute of Rural Management Anand who authored the rst draft for the manual. Lastly, we also thank and acknowledge our funding partners for recognizing and supporting us GIZ, The Swiss Agency for Development and Cooperation (SDC), Doen Foundation and Asian Development Bank: Energy for all. The spirit and objective of these manuals are to serve as guiding principles for the new enterprises which will emerge from the SELCO Incubation Centre across India. This is part of an initiative to make SELCO an open source organization which wants to spread its business process and principles available to one and all to make its mission reach far and wide. Index 1. Acknowledgements .................................................3 2. Introduction ..............................................................6 3. Solar Financing: Structure and Design .................7 3.1 How do we determine if the customer needs nancing? ............................................................................................ 7 3.2 How do we determine if the customer can aord the equipment even if nanced? .................................................. 7 3.3 How should nancing be designed for the customer? ............................................................................................ 7 3.4 Financing Institutions................................................................... 8 4. Banks .............................................................................9 4.1 History of Banks in India and their Role ............................ 9 4.2 Banks and Solar nancing ...................................................... 10 4.3 Benets accruing to banks from lending for Solar home lighting system ............................................................... 10 4.3.1Categorized under Priority Sector lending: ................ 10 4.3.2 Dierential Rate of Interest (DRI) scheme targets: 10 4.3.3 Credit access under nancial inclusion: ....................... 10 4.3.4 Renance from NABARD: ...................................................... 11 4.3.5 Claiming carbon credits: ....................................................... 11 4.3.6 Corporate Social Responsibility (CSR) funds: ............ 11 4.3.7 Ensuring repayment through promotion of livelihoods, rural betterment: ............................................... 11 4.4 Who is eligible for Financing? .............................................. 12 4.5 What are the pre-requisites, conditions and requirements for granting the loan? ............................... 12 SELCO Incubation Centre 5 4.5.1 Loan Proposal ............................................................................... 12 4.5.2 Appraisal of the Proposal ...................................................... 13 4.5.3 Technical Aspects....................................................................... 13 4.5.4 Legal Aspects ............................................................................... 14 4.5.5 Repayment Capacity................................................................ 14 4.5.6 Sanctioning Authority............................................................. 14 4.5.7 Documentation & Disbursement .................................... 14 4.5.8 Rate of Interest ............................................................................ 14 4.5.9 Service Charges .......................................................................... 15 4.5.10 Security .......................................................................................... 15 4.5.11Surety/ Guarantor .................................................................... 15 4.5.12 Repayment .................................................................................. 15 4.5.13 Classication .............................................................................. 15 4.6 Borrower Assessment - Checkpoints ............................... 15 Table 1: Check points for assessing the customer ............ 16 4.7 What are the Dos and Donts while lling the form for a loan? ......................................................................................... 16 Table 2: Documents required by Customers ........................ 17 Table 3: Bank documents to be executed by the banker/ customer/guarantor .................................................................. 17 Table 4: Documents from the Supplier/ Enterprise .......... 17 Table 5: Documentation required for SHGs .......................... 17 Table 6: Documentation required for Joint Liability Groups (JLGs) ................................................................................. 17 4.8 When does the bank reject nancing? .......................... 18 4.9 How can the service provider help the bank in the process of recovery? .................................................................. 18 4.10 Does Government of India provide support? ............ 18 5. Other Financing Mechanisms ................................ 20 5.1 For nancial inclusion of extremely poor communities, how can grant amount be utilized? 20 6. Jawaharlal Nehru National Solar Mission (JNNSM) 23 What is the objective of JNNSM? ................................................. 23 What are the mission targets of JNNSM?................................ 23 6.1 Capital Subsidy Scheme .......................................................... 24 6.1.1 What are the objectives of the scheme? ..................... 24 6.1.2 What are Margin Money, Loan Period and Rate of Interest on Loan? ......................................................................... 25 6.1.3 Security & Monitoring ............................................................. 25 6.1.4 MNRE pre approved Models ............................................... 25 6.1.5 What is the process of getting subsidy from the bank? ................................................................................................... 26 7 Annexure................................................................. 27 7.1 Credit Approval Note .................................................................. 27 7.2 Claim Form ....................................................................................... 28 7.3 Capital Subsidy Form ................................................................. 31 7.4 Frequently Asked Questions ................................................. 33 8. Conclusion .............................................................. 35 9. Bibliography ........................................................... 36 2. INTRODUCTION It is widely accepted that solar photovoltaic technology is the most promising solution to the energy crisis the world is facing today. But this technology has to reach the end user in a way that is most benecial; otherwise there is a great danger of the technology being rejected by the public. Already in many places, where very cheap but low quality renewable energy products are being distributed among rural population, and where products have failed due to lack of service, the technology is being viewed negatively. Nothing can be more detri- mental to society than to be led to believe that renewable energy technology is worthless. The right way forward is to ensure that people are made aware of the benets of renewable en- ergy, and the best way possible to access and use it in their daily lives. The method suggested here may require more time and eort on the part of the suppliers of renewable energy, but this is necessary to encourage people to switch to using renewable energy. First, for each customer segment that is tar- geted, all the current activities that use en- ergy, and the expenditure currently incurred for the same should be analyzed Next, it should be studied if there are other activities of this customer segment where energy access can improve their lives signi- cantly Based on this, diferent technical solutions should be designed and the lifetime cost of each of these solutions should be studied. Lifetime cost and not initial cost should be evaluated. Lifetime cost also includes service costs Once this is known, it should be checked if the solution with least lifetime cost is aord- able by the customer If it is not, the most suitable type of fnancial linkage that would make the expense in- curred worthwhile for the customer should be worked out If the solution with least lifetime cost does not seem feasible from the customer view- point in near future, then the next solution should be considered This is the normal approach when solutions are provided in cities and other well-served towns. But in remote and under-served regions, the tendency is to distribute the cheapest products without any eort being put in to study the best and sustainable solution, often for fear of the ef- fort not being protable. One of the key factors that can bring about a change in this mindset is to learn about the dierent options of nancial linkages available or that can be created in re- mote and under-served areas. SELCO has, by utilizing nancial linkages avail- able in Karnataka, run as a commercial entity with social objectives very sustainably since 1995. This manual, which has used the exten- sive experience of SELCO, aims to help all the parties concerned, the system provider, end user and the nance provider to understand and utilize nancial linkages to bring light and power to energy deprived areas of the country. SELCO Incubation Centre 7 3. SOLAR FINANCING: STRUCTURE AND DESIGN 3.1 How do we determine if the customer needs nancing? First, the best suited solution should be identied for energy needs of a customer. If the initial cost of this solution is not aordable upfront by the customer, then nancing can be considered as a suitable alternative. The money the family/household spends currently on fuel/ energy source can be diverted towards repaying the loan. For example, a rural household spending Rs.150/- per month on kerosene for lighting can avail of a loan to install a bright 2 light solar system. The loan can be repaid fully within a 5 year period with monthly instalments of Rs.150/-, an amount that it was spending for kerosene. The system if properly serviced has an average life of 7 to 8 years. An interim replacement of the battery will add another 7 to 8 years of life. In addition, if the solar light can support their livelihood activity for more hours after dusk (extends the working hours of their shop, weaving, handicraft making, etc), the extra income will contribute amply towards the repayment amount. 3.2 How do we determine if the customer can aord the equipment even if nanced? Aordability is determined based on the existing income and expenditure of the household. The expenditure on the existing source of fuel/light is calculated and diverted towards paying for the solar apparatus. For example, a household with a monthly income of Rs. 5000 may be spending Rs. 150 per month on kerosene for lighting. The cost of the solar product is approximately Rs. 7000 with no monthly expenditure. This household can easily buy the product as well as save Rs.150 per month that it was spending on kerosene. Savings which can be made by switching to solar as a mode of power supply should also be kept in mind. This forms the basis for calculating the aordability for the customer. 3.3 How should nancing be designed for the customer? Financing should be designed based on the cash ow of the customer to signicantly improve the aordability of the product. For example, a farmer growing a crop such as sugarcane receives income once every six months. A loan demanding monthly repayment can be extremely inconvenient for him. However, the same farmer can pay a six monthly instalment as it matches with his cash ow. Institutional nance for the consumer has multiple benets as well. Financing Solar Home Lighting Systems (SHLS) is a relatively new area for commercial banks, Regional Rural Banks, and cooperatives. The technical feasibility of SHLS has been established beyond doubt. Photovoltaic (PV) lighting can provide the user/customer with several benets such as nancial, health, and convenience, if the fairly large up-front capital cost can be nanced with reasonable and aordable terms. Financing PV systems is more or less the same as nancing any other project/product. Each bank may have its own specic guidelines on various aspects of nancing SHLS. 3.4 Financing Institutions It is a myth that the nancial assistance to poor should always be in the form of subsidy or grant. All the sustainable nancial linkages available in the country can also be utilized productively by the poor, if a little eort is put in to implement small innovations to overcome hindrances. Let us try to understand dierent nancial linkages available. 1. Banks / Regional Rural Banks (RRB) 2. Micronance Institutions 3. Co-Operatives 4. Private nancing modes (Chit funds, Marup, Hundi etc) 5. Company self-nancing (e.g. Pre paid model) 6. Intermediate entrepreneur model (e.g. Hawker rental model) 7. Grant used as rolling fund or as margin money support for loans Out of the above mentioned options, Regional Rural Banks (RRBs) are the best suited and most reliable nancial linkage in remote regions. Hence banks will be discussed in the following chapters. However brief explanation of other options will also be found in the manual. SELCO Incubation Centre 9 have matured into institutions that are largely responsible for the nancial inclusion objective of the nation. RRBs are truly the last- mile bank connectivity for end consumer nancing. SELCOs objective of addressing energy needs of the poor in the rural districts of India meant that facilitation of nancing had to be created through the RRBs. RRBs are jointly owned by Government of India, the concerned State Government and a sponsor bank (which is a scheduled commercial bank). 4.1 History of Banks in India and their Role Since the late 18th century, banks have aided the growth of commerce and economic activity in India. It is imperative for any business activity to have its nancing needs fullled through banking institutions. Banking institutions also help the consumer by oering various options of nancing their needs. However, in all such transactions it is vital for the bank to see it as a protable transaction that contributes to its bottom-line. The upfront high capital cost for solar technology makes it essential that a nancing mechanism exists for consumers. However, when SELCO started to advocate it in 1995, it was almost unheard of. Further, the customer segment SELCO wanted to focus on had almost no exposure to banking and neither had the banks dealt with this segment. However, this equation has changed for the better today, as a result of SELCO helping to create a loan portfolio for under-served communities to avail solar home lighting systems. The illustration on this page explains the various types of banks in India. Due to the customer segment that SELCO has chosen to focus on, the majority of transactions rely on the regional rural banks (RRBs). RRBs were established with the objective to ensure sucient institutional credit for agriculture and other rural sectors. They Structure of the organised banking sector in India. Number of banks are in brackets Image Courtesy: Wikipedia Commons * As on April 2013 RESERVE BANK OF INDIA Central bank and supreme monetary authority SCHEDULED BANKS Commerical banks Foreign banks (40) Reginal rural banks (64)* Urban co-opeative (52) Old (22) State Cooperatives (16) New (8) Public sector banks (27) State bank of India and associate banks (8) Other nationalised banks (19) Privatesector banks (30) Co-operative 4. BANKS 4.2 Banks and Solar nancing It is vital to establish the crucial link between economic activity and introduction of solar lighting in a rural household. Only then will a bank see it as a commercial success. It took considerable eorts on the part of SELCO to convince the erstwhile Syndicate Bank sponsored Mallaprabha Grameen Bank headquartered in Dharwad to grant the rst solar loan in 1996. Ever since then SELCO has strived to prove the credible link between livelihood impact and availability of a reliable and healthy source of lighting in a rural household. We have another shining example of how banks have made a signicant contribution to the local village economy by introducing solar lighting in Aryavart Gramin Bank based in Lucknow. In 2008 the RRB, based in one of the most backward states of India, won the prestigious Ashden Award, also known as the Green Oscars for nancing nearly 28,000 solar systems by 2009. To quote Aryavart Gramin Bank Solar home systems have enabled people to work in the evenings and earn more, which is particularly useful to women. The main cottage industry in the area is ne embroidery (Chikan work), for which bright light is a real boon. One family of nine female tailors and embroiderers has seen their earnings increase by about Rs 450 per month each as a result of the PV lighting. The bank organizes credit camps across its operation areas where they demystify solar technology and make nancing available on the spot for the systems. The bank found that customers of other banks turned up for the camps in the hope of getting a solar loan, and this eventually led to Aryavart becoming their banker for all their other needs. 4.3 Benets accruing to banks from lending for Solar home lighting system 4.3.1. Categorized under Priority Sector lending: Solar home lighting systems and other o-grid systems have been included under Priority sector lending based on guidelines by the Reserve Bank of India. The banks can extend nancing as part of meeting their 40% priority sector lending targets. 4.3.2. Dierential Rate of Interest (DRI) scheme targets: As per guidelines of the Reserve Bank of India, a dierential rate of interest of 4% is applicable on loans up to Rs. 15000, extended by banks to weaker communities whose household income does not exceed Rs. 18000 (in rural areas) and Rs. 24000 (in urban and semi urban areas) per annum. The loan is extended for any gainful utilization. Priority sector lending guidelines provide for sub targets to ensure that every bank lends at least 1% of its total advances towards the DRI scheme . Lending for solar home lighting systems to poorer households and weaker communities can help an individual bank meet its DRI targets. 4.3.3. Credit access under nancial inclusion: The existing policy for annual bank expansion mandates that all Regional Rural Banks and Commercial banks must establish at least 25% of their new branches in unbanked rural areas . These branches are meant to improve banking penetration and accelerate nancial inclusion by catering to poor and middle class households in rural areas. SELCO Incubation Centre 11 In the initial phase, these branches are to open no-frills accounts for customers, with minimum balance requirements and low charges. In the next phase, customers are to be provided with credit access for gainful purposes. The solar home lighting system is an ideal portfolio for which credit can be extended to the rural household. The overall impact of nancing such a system would include improvements in education, health, cooking and living conditions as well as provide opportunities for increased income generation at the household level. Thus, provision of credit access for solar systems not only benets the rural household, it also facilitates gainful utilization of bank linkage (going beyond the mere creation of no-frills account) from the nancial institution perspective. 4.3.4. Renance from NABARD: Solar energy systems, particularly at the o-grid level, are eligible for renancing from NABARD up to 90-95% of the total system cost. Although in the current scenario, a number of banks are ush with funds, the NABARD renance facility will allow banks to use their funds for other lending purposes while extending nance (availed from NABARD) for solar energy systems. 4.3.5. Claiming carbon credits: Banks which engage actively in lending for solar o-grid systems can work out a mechanism to claim carbon credits for these systems . This would not only bring in additional revenue for the bank but also help them earn a reputation at the National and International level for their initiative in ghting climate change while supporting energy access. In the larger scheme of things, nancing for sustainable energy technologies would facilitate the achievement of Sustainable Development Goals set forth by the historic Earth Summit (1992) for its member nations. 4.3.6. Corporate Social Responsibility (CSR) funds: Each bank is required to spend 2% of the prots earned towards Corporate Social Responsibility (CSR) related projects. By partnering with solar energy providers, a number of o-grid solar energy interventions for rural and poor communities can be facilitated including street lighting, solar home lighting for poor, remote and tribal settlements, energy needs of community centres and schools, etc. Thus, banks can meet their CSR requirements while also gaining the goodwill and trust of rural communities. 4.3.7. Ensuring repayment through promotion of livelihoods, rural betterment: Several government schemes and bank loans exist for the promotion of livelihood activities, particularly among weaker communities. Use of solar home lighting system in the household could also increase productive working hours and provide possibilities of additional income generation. This will support households in repaying loans availed through banks. Banks are required to lend to Self Help Groups (SHGs) and Joint Liability Groups (JLGs) created by banks themselves or by other organizations. A number of these SHGs are Womens groups and take up household level income generation activities to improve living standards and facilitate womens empowerment. Financing home lighting systems for such SHG and JLG members could not only bring about an appreciable change in the life of women, but also facilitate improvements in productivity of their work. Finally, RRBs and Commercial banks in dierent areas take up village adoption programmes for all round development of villages including nancial, social and educational activities. Solar energy nancing could support in this development process by meeting the much needed energy requirements at the village level. Thus, nancing for solar energy systems for various developmental products and services including lighting, productive use, mobile charging, educational aids, etc. help the banks in meeting their rural development agenda, while also ensuring improvements in customer incomes that would help them regularly repay loans. 4.4 Who is eligible for Financing? The eligibility criteria for nancing are: 4.4.1. Individuals such as farmers, traders, professionals, businessmen, salaried persons including employees of the bank, artisans, craftsmen, daily wage earners, etc. 4.4.2. Organisations such as rms, companies, institutions, associations. 4.4.3. Individuals who have a source of income adequate enough to repay the loan with interest as stipulated by the bank 4.4.4. Individuals who are residents in the service area or the command area of the bank. (He/she need not be a permanent resident/domicile of that area especially in case of salaried persons.) 4.4. 5. An existing customer whose past dealings have been satisfactory. 4.5 What are the pre-requisites, conditions and requirements for granting the loan? 4.5.1. Loan Proposal The loan application should be submitted by the applicant in the form prescribed by the bank. The applicant shall furnish all the necessary information as required by the bank. The enterprise team will help the customer in furnishing the details. In addition, the following requirements should be obtained depending on the category of the applicant: Record of Right (ROR) or village accountants certicate or Adangal or Chitta or Pahani or 10-1 extract or Patta book furnishing of land holding in case of farmers and agriculture. Copy of the Patta/Khatha or possession certicate issued by the Town Panchayat, Municipality or City Corporation in case of urban or metropolitan areas furnishing details of house property. Copy of the rent agreement or any other proof of residence like the family ration card. Latest land revenue/ Municipal Tax/ House tax paid receipt. Proof of tenancy in case the applicant is the tenant occupant of the house. Two recent passport size photographs of the applicant. Proforma invoice/quotation from the manufacturer /supplier of the SHLS for the cost of the system including the accessories and the installation. Copy of the test report issued by the Solar Energy Centre or Authorised Test Centre. The applicant shall also submit original title deeds of the property, encumbrance certicate, legal opinion, property valuation certicate, and other supporting documents whenever the loan is required to be secured by mortgage. SELCO Incubation Centre 13 In case of corporate clients and frms, audited nancial statements for the last three years, partnership deed, memorandum of understanding, articles of associations, board resolution to borrow, etc. Income Tax assessment order or the copy of the return lled with the ITO (wherever applicable). 4.5.2. Appraisal of the Proposal On receipt of the loan proposal for nancing SHLS along with the requirements, the Branch Manager or any other ocer designated by him should undertake a pre-sanctioned spot inspection of the location/site where the SHLS is to be installed. The proposal should be thoroughly discussed with the applicant. The proposal should be appraised taking into consideration the technical, nancial, economic, commercial, managerial and legal aspects to determine the technical feasibility, nancial viability and overall bankability of the proposal. The repaying capacity of the borrower should be carefully assessed. 4.5.3. Technical Aspects The nancing bank should get from the manufacturer or his authorised dealer a copy of the test report issued by the Solar Energy Centre (SEC)/Other Authorised Text Centre (OATC) certifying that the SHLS being supplied to the applicant conforms to the specications prescribed by the Ministry of New and Renewable Energy (MNRE), Government of India. In addition, the nancing bank should ensure that there is a minimum warranty of ve years for the complete system including battery (every component except the compact uorescent light or bulb), and a minimum warranty of 10 years for the PV module. All Warranties should commence from the date of installation. The bank should also ensure that the manufacturer/ dealer of the systems oers Annual Maintenance Contract (AMC) covering supply of spares (excluding batteries) and service for a minimum of ve years mandatory warranty period to ensure satisfactory operation of the system on a sustainable basis. The terms of the AMC should be agreed upon by the system supplier and the end user on a reasonable basis. The exact requirement and the design of the SHLS should be determined by the end user in discussion with the manufacturer/authorised dealer. 4.5.4. Legal Aspects Legal problems if any, especially in installing the system and, in case of nance for larger systems should be looked into. Legal compliance with respect to factors such as collateral security must be ensured. 4.5.5. Repayment Capacity First, the product itself needs to be designed such that the system cost when converted into a loan or instalment, makes it aordable and provides maximum benet (or payback) within the repayment period. This has to be true even in the absence of subsidy. Commercial banks stipulate that the loan for SHLS be repaid within a stipulated period. The bank has to adopt a Holistic Approach taking into consideration the entire family income and expenditure of the borrower. The bank has to be satised about the repaying capacity of the borrower who may be relying on other viable and known sources of income as is being done in the case of Personnel Banking or Consumer Durable Loans. 4.5.6. Sanctioning Authority After the credit proposal is thoroughly appraised and its bankability is established, the Bank Manager sanctions the proposal with the terms and conditions if any. In other cases, the proposal, along with the Branch Managers recommendation is sent to higher authorities for credit decision. Once the loan is sanctioned, the manufacturer/ supplier who gave the quotation/ proforma invoice should be informed of the same, and asked to supply the SHLS to the applicant. He should also be told that the bank will remit the cost of the SHLS to him upon its satisfactory installation and conrmation of the same by the customer. 4.5.7. Documentation & Disbursement Upon fullment of the terms and conditions, the loan is arranged by obtaining the loan documents executed by the borrower and the surety (wherever applicable). Depending on the quantum of loan and its category, hypothecation of the SHLS unit is obtained. Wherever required, collateral like mortgage of land, building etc. or pledge of NSC, KVP or assignment of LIP etc. can be obtained. The loan amount along with the margin contribution (generally held in account of the borrower) shall be released to the manufacturer or supplier upon a satisfactory report of installation of the SHLS conrmed by the borrower. Note: The original invoice and stamped receipt must be obtained from the manufacturer/ dealer. 4.5.8. Rate of Interest The RBI directives govern the interest rate on SELCO Incubation Centre 15 loans up to Rs. 2 lakhs for priority sectors. The interest rate on SHLS loans are eligible to be classied under Priority Sector and should not exceed the Prime Term Lending Rate (PTLR) of the bank. In case the loan exceeds Rs. 2 lakhs under Priority Sector or where the SHLS loan is outside the purview of Priority Sector, the interest rate depends on the policy of the lending bank. Penal interest at 2% above the normal rate may be levied for overdue loans where the loan amount exceeds Rs. 25,000 in case of Priority Sector and Rs.5000 in case of Non Priority Sector. 4.5.9. Service Charges One time processing and other charges are normally at 0.1% to 0.25% of the loan amount at the time of arranging the loan. The rate of service charges varies from bank to bank, and should be applied as per the banks guidelines. 4.5.10. Security Hypothecation of the asset created out of the loan is the SHLS Creation of charge on the property or mortgage of immovable property as collateral security wherever required (normally when the loan amount exceeds Rs. 25,000) Collateral such as NSC, KVP, LIP of adequate value are also acceptable. 4.5.11. Surety / Guarantor A credit worthy party (preferably third party) may join as the loan transaction Surety / Guarantor. 4.5.12. Repayment The loan is to be repaid in monthly/ quarterly/ half yearly / yearly instalments over a period of ve years depending on the source of income of the borrower. Interest, however, shall be paid quarterly or as and when debited to the loan account. Note: Initial moratorium of three months from the date of loan may be given for repayment whenever found necessary. 4.5.13. Classication The loan facility for SHLS is generally extended in the form of a Term Loan. As per RBI regulations, loans extended for SHLS or any other solar appliance shall be classied depending on the occupation or vocation of the borrower. For instance an SHLS loan extended to a farmer should be classied as an agricultural advance. The SHLS loan extended to retail trade shall be classied as a retail trade loan under priority sector. A loan granted to a salaried person for SHLS shall be classied as a non priority sector advance. Note: Classication of advance has a direct bearing on the interest rate charged. 4.6. Borrower Assessment - Checkpoints This section of the manual is designed to instruct the Bank ocials on the methods to be adopted for nancing the installation of SHLS, typically including a PV module and appropriate balance-of-system components necessary to provide reliable, safe, and aordable electricity from sunlight for domestic and other similar usage. The SHLS includes a module, battery, charge controller and a set of compact uorescent lights. Larger systems may also include an inverter (to convert the DC electricity generated by the PV modules to AC) and connections for televisions, radios, and other domestic electrical appliances. To frame a proposal quickly, bankers and promoters must meet and discuss. The assessment standards will vary from person to person, depending upon the size of the loan, experience of the banker, dealings of the borrower and so on. The following brief should help the banker to prepare the loan proposal eciently: Table 1: Check points for assessing the customer The background of the promoter/beneciary/ entrepreneur must also include the following details - Who is the borrower? - What business is he doing? - Is he a customer of the bank? - If he is not, which bank has he been dealing with so far? - Why did he not approach that bank for credit requirements? - If he is a customer of the bank, then has he borrowed from it in the past? What is his track record? - In case of a new borrower / promoter, the banker may wish to collect further details. The banker may prefer to meet the promoter/ borrower directly and not through any agency or third person. Such a meeting provides an opportunity to collect rst hand information for discussion. It also helps the banker to check the various statements and gures furnished in the proposal/ application. It must be seen whether the cost estimates are reasonable as per the standard rates, and whether any capital and/or interest subsidy is available. The time required to install and energize the equipment is to be specied clearly and correctly. All documents required by the banker are to be submitted along with the application. The availability of after-sales services must be ensured. There should be arrangement to provide spares in case of defective materials supplied or for replacement, whenever required. Initial payment holiday should be specic and xing of the instalments (whether monthly, quarterly, half yearly, etc.) must be done considering the source of income. The following aspects must also be looked into - What is the amount of loan required? - What will the loan mean to the borrower from the prot point of view? - When and how will the loan be repaid? - Where will the funds come from for repaying the loan? - Will the SHLS help the borrower to reduce expenditure and increase savings to repay the loan? - Does the borrower have a basic idea about the possible amount of net savings/ prot after the installation? - How will the borrower bring in the required margin money? - Does the borrower have the necessary technical skill to handle the PV system and its maintenance or does he need any training? - Has he properly assessed the special features such as number of lights required etc.? 4.7 What are the Dos and Donts while lling the form for a loan? SELCO Incubation Centre 17 In most cases it is the bank manager or other executives at the bank who assist in lling the loan form and in some cases it is the sales executive or the branch manager. All the required documents must be available at the time of lling the form. The required documents are mentioned below. It is mandatory that the No Objection Certicates (NOC) must be issued. Important: Care should be taken that the borrower does not have a default history. Table 2: Documents required by Customers KYC documents like ID and Address proof for opening A/c (new customers) Photographs of both borrowers and Guaran- tors No Due Certicates from other nancial agencies Record of Rights, Tenancy and Crop Inspec- tion (RTC) for Agriculturists (income proof for the agriculturist) Salary certicate/Pay slip (income proof for the salaried) ITR Returns/ P&L and Balance sheet (income proof for business and others) Margin deposit (20% in case of JNNSM scheme) Documentation charges/ Bank charges (in most cases will be debited to their A/c) Adavit/Declaration of Family Tree (Vamsha Vruksha) Tax paid receipt of the property Khata/1-11 or 12 (survey record from village panchayat) Table 3: Bank documents to be executed by the banker/customer/guarantor Application cum appraisal and sanction/rec- ommendation to the higher authority Inspection Report by the banker Terms and conditions letter Demand Promissory Note (DPN) and De- mand Promissory(DP) Note delivery letter Deed of Hypothecation cum Guarantee Agreement Transfer slip to transfer the amount from the loan A/C to the SB A/C Table 4: Documents from the Supplier/ Enterprise Quotation from the supplier Stamped receipts Delivery note/Tax invoice Insurance policy (wherever applicable) Performance guarantee letter from the sup- plier/warranty cards Declaration by the agency supplying o-grid solar application system (subsidy claim) Table 5: Documentation required for SHGs Application SHG Resolution Financial Statement of the group SHG Grading form Terms and Conditions letter DPN and DP Note delivery letter Articles of agreement (Agreement Deed) Inter se Agreement (General power of attorney) Table 6: Documentation required for Joint Liability Groups (JLGs) Application Application for loan by individual member under JLG scheme Sanction cum terms and conditions letter Letter of Undertaking (to be obtained from each member of JLG as borrower with other members as guarantors) Inter se Agreement (executed by the members of JLG) Mutual Agreement (to be stamped as an agreement) DPN and DP Note delivery letter from each member 4.8 When does the bank reject nancing? The borrower is a defaulter The borrower is not bankable. It means that he has no regular source of income or he is not in a position to pay back the loan The borrower does not have proper security. In case he owns assets, he may not have proper records of them The bank also uses a creditworthiness form to assess in detail if the customer is worthy of loan The bank at times may not have a valid reason while rejecting the loan; the sales executive must have the patience to nd out why the loan is rejected and help the borrower in obtaining the loan or nd another source of funding 4.9 How can the service provider help the bank in the process of recovery? The key to ensure smooth nance tenure for both the beneciary as well as the banker is to have a good operational solar home lighting system. This can only happen by ensuring regular service or a mechanism by which the customer can reach the service provider for any help in case of a breakdown. At any point when there is no service the system is rendered useless, and automatically the customer sees no point in continuing to repay the loan. The other factor is to educate the terms of nancing in a clear medium to the customer. The customer should have no ambiguity about total cost of the system, down payment, loan term, interest rate, instalment frequency and amount and the mechanism to repay as well as familiarity with the bank sta. All this will result in a good standing relationship for all the three parties beneciary, bank as well as the service provider. In the event of any unforeseen circumstance of the beneciary defaulting on repayment, the service provider must assist the bank in the recovery process. Although as a commercial transaction the service provider is not liable to get involved in the recovery mechanism it helps build a long standing relationship with the nancing institution in the process. The service provider may make a courtesy visit to the customers place to enquire the reason for non-payment and the need for any assistance in this matter. Banks generally have a monitoring team whose assistance is sought for any loan recovery. The service provider should co-operate with this team, if requested for any assistance. 4.10 Does Government of India provide support? Government of India announces various support schemes to popularize the usage of renewable energy. Most of the times, banks are involved in the process of disbursing monetary support to the beneciaries. From time to time, the SELCO Incubation Centre 19 After the customer is ready to buy a SHLS & proper SHLS is identied. Collect the full payment from the customer No No B a n k
M a n a g e r Find other nancial linkages. Does the customer need nancing? Is the customer credit worthy? Verify the required docs and get the NOC Fill the subsidy from and the claim from Release the money to the entrepreneur Customer pays the instalments as designed Process ow for nancing a solar home lighting system government issues notice to the nationalised banks and provides guidelines on the process of implementing such support programmes. Jawaharlal Nehru National Solar Mission is a government mission started by the Ministry of New and Renewable Energy to encourage the usage of renewable energy in India with specic targets over a long period. The details of JNNSM are discussed in detail as a separate chapter in this manual. Service providers should be completely aware of such government schemes and should actively associate with banks to help them reach these schemes to the end user most productively. Despite best eorts we have seen a number of instances where end user nancing has not been possible through the banking channels mentioned above. This can happen for a variety of reasons including: Perceived risk profle of the customer Lack of or insufcient essential identity proof documents No banks operating in the customers vicinity In such cases where nancing through banking channels is not possible, some other nancing options can be considered. These are listed below: Micro Finance Institutions (MFI): These provide nancial services to micro- entrepreneurs, small businesses or to self- help groups. They usually operate in areas which lack access to banking due to high transaction costs associated in servicing these locations, or the risks associated with them. The concept of micronance institutions was pioneered by Dr. Muhammad Yunus in Bangaldesh through the Grameen Bank. MFIs rely on the strength of group dynamics to ensure the repayment capacity as well as transaction costs. Private forms of fnance Chit funds, Hundis, Maroop: Each region has its own form of savings scheme and are known by various names across India chit, chit fund, chitty, kuri or maroop (popular in Manipur). They all represent an agreement with a specied number of persons, who will each subscribe a xed amount each month over a denite period. In return, each subscriber is entitled to a prize amount which is determined by an auction, lottery or a tender. Company self-fnancing through pre- paid payment options: A few companies like Simpa have introduced a pay-as-you-go pricing to household energy systems. Users pre-pay based on actual usage and each payment adds up towards the total purchase price of the solar home system. Consumers can send payments using a mobile phone. Once fully paid, the solar home system unlocks and delivers free electricity for the expected 10-year life of the product. 5.1 For nancial inclusion of extremely poor communities, how can grant amount be utilized? SELCO business model has always been about establishing strong innovative linkages between end users, energy services, technology and nancing. SELCO views a product as a combination of technology and nance and hence uses a 2 pronged approach of door-step service and door-step nancing. It has been 5. OTHER FINANCING MECHANISMS SELCO Incubation Centre 21 able to assess the end user needs and create a solution that best ts his/her need. This need can be technical, nancial or a simple process innovation that could empower the lives of under-served or un-served households and small scale businesses. The key features of the model are: i) Creating products based on end user needs - thus going beyond the role of just being a technology supplier to actual customizing the products to suit individual needs, along with dedicated installation and after sales services from well established energy service centre network. ii) Flexible nancial packages to suit the end users aordability and cash ow. These approaches are further innovated under Mission Projects for eectively reaching out to those poorer sections that are generally never a part of the mainstream nancing. In order to create the rst time bridges to the nancial institutions, Mission Projects uses several innovative mechanisms to facilitate linkages. Risk Guarantee SELCO shares the risk of repayment with the nancial institution by providing Buy Back Letters upon default or by opening Security Deposits to serve as collateral against the borrowed loan amount. Margin Money Financing - In order to enable the loans, the end users need to contribute certain percentage of the loan amount as down payment. In case of Mission projects, SELCO bears the costs towards this down payment by contributing the Margin money and ensures that loans are enabled. Interest Subsidy In another mechanism, SELCO contributes towards waiver of certain percentage of interest rate. Partial Contribution Many a times, in partnership with other organizations or under any particular welfare schemes by Government departments, SELCO directly contributes a certain percent of the total cost of the product. Smart Subsidies on Product Pricing The product prices are subsidized by providing appropriate discounts and waivers for the benet of the end user. Products / Services Innovation In certain special cases, certain technical/ services innovations are brought into the regular systems in order to bring down the cost of the product and make it aordable to the end user. High Risk Projects These are undertaken with specic poor segments of the society where the outcome of the project is highly unpredictable, e.g. Basket weavers, Shepherds, Silk reeling etc. A few other R&D projects are also undertaken whose nature of outcome is unknown, e.g. micro-energy entrepreneurs. As of now, the Mission Project initiative is funded through the soft monies raised from a few grants, awards, etc. The future plan is to evolve into some sort of a sustainable Revolving Fund structure which can be used for all above mentioned purposes. Some Highlights Nearly 5000 un-electrifed homes have been powered with solar lighting systems under the project SELCO is continuously trying to engage with the Siddi tribes (African tribes) based in North Karnataka and has been successful in electrifying 33 Siddi Households in Yellapur, Uttar Kannada that was nanced by KVGB. Urban poor- energy-fnancial linkage established successfully and replicated in three slums of Pragatinagar, Manipal; Beedinagudde, Udupi and Peenya, Bangalore. SELCO has worked with the Maldhari communities in the Rann of Kutchh who live in completely cut o remote areas without any access to clean energy and provided 20 lighting systems till date. SELCO has taken on the challenge of nancial-energy inclusion for 200 o-grid non-bankable poor homes in Gulbarga, Karnataka. SELCO Incubation Centre 23 6. JAWAHARLAL NEHRU NATIONAL SOLAR MISSION (JNNSM) The National Action Plan on Climate Change points out: India is a tropical country, where sunshine is available for longer hours per day and in great intensity. Solar energy, therefore, has great potential as future energy source. It also has the advantage of permitting the decentralized distribution of energy, thereby empowering people at the grassroots level. Based on this vision, a National Solar Mission is being launched under the brand name Solar India. The National Solar Mission is a major initiative of the Ministry of New and Renewable Energy, Government of India (MNRE 1 ), to promote ecologically sustainable growth while addressing Indias energy security challenge. It will also constitute a major contribution by India to the global eort to meet the challenges of climate change. What is the objective of JNNSM? The objective of the National Solar Mission is to establish India as a global leader in solar energy, by creating the policy conditions for its widespread usage across the country as quickly as possible. What are the mission targets of JNNSM? The mission targets of JNNSM are: To create an enabling policy framework for the deployment of 20,000 MW of solar power by 2022. To ramp up the capacity of grid-connected solar power generation to 1000 MW within three years by 2013; an additional 3000 MW by 2017 through the mandatory use of the renewable purchase obligation by utilities backed with a preferential tari. The ambitious target for 2022 of 20,000 MW or more, will be dependent on the learning of the rst two phases, which if successful, could lead to conditions of grid-competitive solar power. To promote programmes for of grid applications, reaching 1000 MW by 2017 and 2000 MW by 2022. To achieve 15 million sq. meters solar thermal collector area by 2017 and 20 million by 2022. To deploy 20 million solar lighting systems in rural areas by 2022. Since the nationalization of 14 major commercial banks in 1969 and 6 more banks in 1980, the Governments policy has been clearly directed towards making these banks play an important role in promoting rural development. Be it 1 http://www.mnre.gov.in/solar-mission/jnnsm/ introduction-2/ nancing for investments, to increase agricultural production or promoting small businesses or industries, transport and communication, the banks have pumped enormous amount of money as credit assistance. PLEASE NOTE: The details of the JNNSM scheme, particularly the interest rates and subsidy conditions are subject to revision. The details mentioned in the book were taken when the book was being compiled (Nov 2012). Please refer to the MNRE website for current updates. http://www.mnre.gov.in/ solar-mission 6.1 Capital Subsidy Scheme 2 Capital Subsidy Scheme will be implemented by NABARD through Regional Rural Banks and other commercial Banks for Solar Lighting Systems and Small Capacity PV Systems. Under this scheme, NABARD will extend the subsidy of 40% of the benchmark cost which is Rs.270/- per watt peak subject to a maximum of Rs. 108/- per watt peak, to the Regional Rural Banks (RRBs) and other commercial Banks, for purchase of solar lighting systems and other small capacity PV systems by individuals. The RRBs and other Commercial Banks could extend the loan for the balance cost of the systems at normal interest rates for the period decided by the RRBs or the Banks. While implementing this scheme, NABARD will follow the minimal technical requirements and Quality Standards in respect of the o-grid SPV power plants/systems which are mentioned in Annexure-3 enclosed with the Ministrys Administrative Approval No.5/23/2009-10/P&C dated 8th July 2010. 6.1.1. What are the objectives of the scheme? The main objectives of the scheme are to: - Promote o-grid applications of solar energy (both PV and Solar Thermal) - Create a paradigm shift needed for commoditization of o-grid solar applications - Encourage replacement of non-renewable energy sources like fossil fuels, kerosene and diesel with solar energy to meet the energy requirements. 6.1.2.What are Margin Money, Loan Period and Rate of Interest on Loan? The borrowers are required to bring in 20% of the cost of the project as the margin money for accessing credit facilities from banks to acquire the assets. The loans to cover the balance (within the ceilings specied against each asset) after reducing the eligible capital subsidy, would be extended with a repayment period not exceeding 5 years and would carry an interest rate which is the regular rate of interest charged by the bank. There is a minimum period of 3 years where the subsidy is locked. This is a backend subsidy which helps to keep a track of the repayment of the loan. 6.1.3.Security & Monitoring The loans extended under the scheme would be secured as per the existing RBI guidelines in this regard. The nancing banks will have to maintain separate records for loans/subsidy extended under the scheme and the details 2 http://mnre.gov.in/le-manager/UserFiles/bank_ subsidy_scheme_jnnsm_st_29022012.pdf SELCO Incubation Centre 25 3 http://mnre.gov.in/le manager / UserFiles /Revised_Capital_Subsidy_ and_Benchmark_ costofthe _SPV _system.pdf will have to be submitted to MNRE/NABARD/ IREDA as and when required. MNRE/NABARD/ IREDA will also have the right to inspect the books of accounts pertaining to such accounts whenever required. 6.1.4. MNRE pre approved Models With 3 eect from 01.04.2011 the benchmark cost for photovoltaic was revised to Rs. 270 per Wp (with battery) and Rs. 190 per Wp (without Note: The banking norms for nancing SHLS are by and large common, but may vary from bank to bank in terms of Rate of interest (ROI), Margin & security, Documentation, etc. battery bank) respectively (as indicated in para 5.3 of the Administrative approval- 5/23/2009- 10/P&C dated 08.07.2010). For general areas the Central Finance Assistance (CFA) would be 30% limited to Rs. 81 per Wp (with battery back-up) and Rs. 57 for systems (without storage battery). For Special category states/North-East States the CFA would be 90% limited to Rs. 243 per Wp (with battery back-up) and Rs. 171(without battery backup). Table 1 Technical and Financial Parameters of pre-approved PV models to be nanced Model Photo Vol- taic Mod- ule/ Panel (Wp) Battery Capacity (AH) Maximum Recommended Load and Duty Cycle Benchmark Cost (in Ru- pees) Maximum Capital Subsidy eligible (Rs) (@ Rs.108 per watt of module capacity) I 10 12V, 7AH (SMF) 5-7 watt load for 3 to 4 hours (20watt hrs/day) 2700 1080 II 18-20 12V, 20 AH (Tubular L.M/ Gel VRLA) 10 watt load for 4 hours (40 watt hrs/day) 4860 5400 2160 III 37-40 12V, 40AH (Tubular L.M/ Gel VRLA) 20 watt load for 4 hours (80watt hrs/day) 9990-10800 4320 IV 50 12V, 60AH (Tubular L.M/ Gel VRLA) 30 watt load for 4 days (120 watt hours/day) 13500 5400 V 70-80 12V, 80AH (Tubular L.M/ Gel VRLA) 45 watt load for 4 hours (180 watt hours/day) 18900-21600 8640 VI 100 12V, 120 AH (Tubular L.M/ Gel VRLA) 60 watt load for 4 hours (240 watt hours/day) 27000 10800 VII 125 12V, 150AH (Tubular L.M/ Gel VRLA) 75 watt load for 4 hours (300watt hours/day) 33750 13500 VIII 150-160 24V, 75/80AH (Tubular L.M/ Gel VRLA) 90 watt load for 4 hours (360 watt hours/day) 40500-43200 17280 IX 200-210 24V, 100/120AH (Tubular L.M/ Gel VRLA) 120 watt load for 4 hours (480 watt hours/day) 54000-56700 22680 6.1.5. What is the process of getting subsidy from the bank? Once the customer is identied and the need for nancing is accomplished, the sales executive gets a formal approval from the bank manager to nance. A credit approval note 4
is authorised, on the basis of which the local branch will install the system and ensure the margin money is duly paid. A subsidy form is lled by the bank. The bank manager has to certify the Claim Form 5 and the Capital Subsidy form 6 which are sent to the Regional Oce (RO) or the Zonal Oce (ZO) of the particular RRB. Once it is approved, the amount is released directly to the organisation 4 Annexure 1 5 Annexure 2 6 Annexure 3 SELCO Incubation Centre 27 7. ANNEXURE Model / Type of System Unit Cost Quantity Total Cost Direct/ Loan Margin Amount (To be collected by....) Balance Amount (To be col- lected by....) CAN / BRANCH / S No. .................................................................................... Date .................................................................... Name of the Customer & Address ........................................................................................................................................... ......................................................................................................................................................... ......................................................................................................................................................... ......................................................................................................................................................... Contact Telephone Number ........................................................................................................................................................ 7.1 Credit Approval Note Name of Bank, Branch Name ............................................................................................................................................................. Type of Bank Account & Account Number .............................................................................................................................. Whether loan has been availed from the bank ( Yes/No) ................................................................................................ (If YES, Loan Ref No. .................................................................................................................................) Assets ( Own House / Land, etc.) ..................................................................................................... Approved by SELCO Branch Incharg Subject to terms & Conditions of our Bank Operations Manager CREDIT APPROVAL NOTE Subject to terms & Conditions of our Bank Loans under JNNSM Scheme of GOI DRAWAL APPLICATION FOR SANCTION/ RELEASE OF REFINANCE UNDER JNNSM SCHEME OF GOI UNDER AUTOMATIC REFINANCE FACILITY (ARF) Ref. No. Date: From (Name and Address of the Financing Bank) To The Chief General Manager/ OIC NABARD Regional Oce, _______________________ Dear Sir, Application for Sanction/ Release of Renance under the Scheme for Solar O-grid (Photo- voltaic & thermal) and decentralized applications under the Jawaharlal Nehru National Solar Mission of the Government of India We hereby apply for sanction and release of renance aggregating to `(Rupees only) in respect of nancial assistance sanctioned and disbursed by us to our constituents, the particulars in respect of which are furnished in the Annexure. We agree to repay the renance availed of by our Bank as per the repayment schedule appended to this drawal application. We also agree that the repayment schedule(s), if revised and communicated by NABARD, in respect of renance claimed in this application will be scrupulously followed by us. 2. We certify that: i. The individual loan proposal conforms to the policy, procedures and guidelines laid down by NABARD under the captioned scheme from time to time. ii. The proposals have been appraised by us/ our branches and are found to conform to the technical and nancial parameters laid down under the captioned scheme guidelines of NABARD. iii. We have not applied earlier for capital subsidy/ renance covered by this drawal application from NABARD or any other institutioniv. The renance amount claimed is exclusive of the recoveries/ capital subsidy/margin money received or receivable. 7.2 Claim Form SELCO Incubation Centre 29 v. We have obtained consent letters from our constituents to the eect that they have no objection to our furnishing to NABARD all such information as may be required from time to time. vi. MNRE/NABARD and IREDA will have the right to seek any information as they may require from time to time and also for inspection of the unit. vii. NABARD shall have the right to inspect books and loan accounts covered under this application and /or call for copies of the related memoranda/ sanction notes/ any other relevant information in this behalf. viii. Loans granted under DRI scheme have been excluded. ix. All the units nanced under the scheme in respect of which renance is claimed are eligible under Jawaharlal Nehru National Solar Mission scheme of Government of India for subsidy/ renance. x. The loans sanctioned to the borrowing units does not exceed the maximum loan limits prescribed under the captioned scheme 3. We further certify that the amount of renance already availed by us and outstanding as on date together with the proposed availment would be within the borrowing limit of our Bank. 4. We also certify that the rate of interest charged on the loan amount conform to the rates stipulated by NABARD under the captioned scheme. 5. We agree that if on verication of our records and of our constituents,NABARD comes to the conclusion that the accounts against which the disbursement of capital subsidy/ loan does not conform the guidelines laid down by it from time to time, NABARD will have the right to recall the entire capital subsidy/ renance disbursed in respect of such accounts on such conditions as stipulated in the General Renance agreements. For and on behalf of the nancing Bank Signature of the authorized ocer with designation and rubber stamp. Enclosure Date : Place : From Borrower to Bank (Repayment received during) From bank to NABARD Date Amount (`) (Repayable as on) Amount (`) 01 July to 31 December .. 31 January .. 01 January . To 30 June 31 July 01 July to 31 December .. 31 January .. 01 January . To 30 June 31 July 01 July to 31 December .. 31 January .. 01 January . To 30 June 31 July 01 July to 31 December .. 31 January .. 01 January . To 30 June 31 July 01 July to 31 December .. 31 January .. 01 January . To 30 June 31 July SELCO Incubation Centre 31 Sl. No. 1 Pre-approved Model Nos. 2 1 3 2 4 3 5 4 6 5 7 .... 8 .... 9 11 10 Solar Water Heating System 11 Total 12 Individuals Groups Category - SC - ST - OBC Minority Community No. - Female Total cost of the sys- tem for units claimed Capital Subsidy Amount eligible for units claimed (`) Loan Amount exclud- ing capital subsidy for units claimed (`) Margin Money by the borrower for the units claimed (`) Certied that all the terms and conditions stipulated under the captioned scheme are satised in case of all loans for which capital subsidy is claimed with this application and that the capital subsidy claimed are within the monetary limits prescribed under the scheme. We have not applied earlier for capital subsidy covered by this drawal application from NABARD or any other institution DRAWAL APPLICATION FOR CAPITAL SUBSIDY UNDER THE CAPITAL SUBSIDY-CUM- REFINANCE SCHEME FOR INSTALLATION OF SOLAR OFF-GRID (PHOTO-VOLTAIC AND THERMAL) & DECENTRALISED APPLICATIONS UNDER THE JAWAHARLAL NEHRU NATIONAL SOLAR MISSION Name of the Bank: Period of the Claim (Month/Quarter) : Details of the claim. Name of the Branch: ........................................ District:........................................ State:........................................ 7.3 Capital Subsidy Form Capital subsidy Account: Capital Subsidy Amount Received from NABARD 1. Drawal Application No. dated : ` 2. Drawal Application No. dated : ` 3. . ____________________________________________________________________________ Total Capital Subsidy Received : ` Capital Subsidy Disbursed: 1. Against Claims made under Drawal Applcation No. : ` 2. Against claims made under Drawal Application No. : ` 3. : ` ____________________________________________________________________________ Total Capital Subsidy Released : ` Balance Capital subsidy with the Bank (as on ) : ` Total Capital subsidy claimed with this application : ` (Signature of the authorized ocer of the Bank) Date and Seal of the Bank SELCO Incubation Centre 33 7.4.1 Is nancing a SHLS a bankable proposition? If only the direct benets accruing as a result of savings in electricity charges and /or other conventional sources of lighting like kerosene, candle, etc., are taken into consideration, the SHLS needs about 10 15 years to be viable, which is still well within the economic life of the major component in the system i.e. the panel. If the generation of additional income by way of extended hours of work etc., consequent to providing SHLS is considered, it becomes viable and bankable even more quickly, within 5- 7 years. 7.4.2 Does nancing of SHLS fall into the category of priority sector banking? As per the existing guidelines of the Reserve Bank of India, nance extended by banks to devices of renewable energy shall be classied based on the major activity of the borrower. Hence, a loan granted for SHLS to a farmer, retail trader, professional & self employed person has to be classied under Priority sector. A loan for SHLS granted to a salaried person will have to be classied as a Non priority sector advance. 8.3 Can any model of SHLS be nanced? Bank may choose to nance any SHLS model depending on the general policy followed by the bank management. It is advisable that the bank observes appropriate due diligence on the service provider of the system so that y-by night operators products do not get nanced. Poor quality models destroy the customers faith in SHLS. Certication on the quality of systems from reputed national institutions such as central Power Research Institute (CPRI) should make banks more comfortable with providing nancial assistance. 7.4.4 Does the Solar Home Lighting System have BIS certication? Currently, there is no BIS certication for SHLS. Certication by Solar Energy Centre (SES) Gwalpalhari, Gurgaon, Electronics Regional Test Laboratory (ERTL) Kolkata, CPRI Trivandrum, Electronics Testing & Development Center Bangalore is available. Banks may insist on certication from any one of the above certifying agencies. 7.4.5 Is there a restriction on the size of SHLS while nancing? No, at present the demand is generally for 1/2/3/4 light systems. Banks can very well extend nance for SHLS units comprising of any number of lights, and /or lights with other utilities like fans, powering transistor, radio, refrigerator etc. Manufacturers/dealers/service providers should provide customized units to suit the requirement of the end user. 7.4.6 Can the nancing of SHLS be made to the tenants who reside in the house or should it be made only to the house owner? Generally it is a NO. But in some cases, banks can provide nance to the tenant occupants, for purchase and installation of SHLS. 7.4 Frequently Asked Questions 7.4.7 Are there any restrictions on the category of people who can borrow loans for SHLS? There is no restriction on nance for any individual. However, in the case of proprietorship rms, or SHGs or institutions with board members like religious places, trust or a co- operative society, nance cannot be provided as the position holder cannot be charged with the liability of the loan. 7.4.8 Can a group of people qualify for a loan for the purchase of SHLS? Yes, if the panel can be installed in a convenient central location and electricity generated is distributed on mutually agreed terms between the end users (group members), then formal or informal groups can be provided nance. It is advisable to insist on a proper interest agreement among group members specifying borrowing, repayment utilization, maintenance of the unit etc. 7.4.9 Is insurance mandatory for the system to be nanced? No it is not mandatory. It is left to the borrower to decide in favor of or against a policy. However, the policy that is popular with an individual bank may be followed. SELCO Incubation Centre 35 The idea that has germinated and bloomed in the state of Karnataka now has to reach far and wide across all states of India to ensure o-grid solar systems reach the dark households and bring a reliable light source into their lives. The story of SELCO is impossible without the lifeline of the robust banking network of our country. The objective of the nancial linkages manual has been to demystify the roles / procedures / stakeholders involved in creating the end consumer nancing that is crucial to overcome the upfront high cost of solar home lighting systems. 8. CONCLUSION The ability of this solution to impact multiple more lives is the aim of creating the SELCO Incubation Centre where we are mentoring with early stage entrepreneurs who aim to build their organizations on SELCO principles. This manual will facilitate knowledge transfer on the procedures and policies with respect to nancing for the end consumer. We hope that this documentation will create many new stories of newer and far ung communities that are empowered with lights in their lives. 9. BIBLIOGRAPHY Access to energy services Case studies in collaboration with Renewable Energy & Energy Eciency Partnership (REEEP) Ashden Awards Case Study 2008 Aryavart Gramin Bank Bharatiya Vikas Trust, Manipal manual on Solar Energy Financing SELCO Incubation Centre 37 SELCO, a social enterprise established in 1995, provides sustainable energy solutions and services to under-served households and businesses. It was conceived in an eort to dispel three myths associated with sustainable technology and the rural sector as a target customer base: Poor people cannot aford sustainable technologies Poor people cannot maintain sustainable technologies Social ventures cannot be run as commercial entities SELCOs current product oerings include solar PV lighting systems, water heating systems, cook stoves and other customized products to meet specic needs. SELCO currently employs about 170 employees in Karnataka and Gujarat spread across 25 energy service centers. Since 1995, SELCO has sold, serviced and nanced over 125,000 solar systems to its customers. SELCOs investors, all social, include E+Co, The Lemelson Foundation and The Good Energies Foundation. S3IDF The Small Scale Infrastructure Development Fund (S3IDF) is a non-prot organization that addresses poverty alleviation in developing countries through two mission objectives: To employ its Social Merchant Bank Approach (SMBA) in India to build micro-, small-, and medium-scale enterprises that positively impact the poor and the environment To promote, disseminate, and transfer the SMBA to achieve a broader and greater impact within poor communities by enabling other development institutions to leverage both philanthropic and development capital to facilitate local commercial co-nancing for micro-, small-, and medium-scale enterprises that explicitly benet the poor. S3IDF-India was established by S3IDF-US in 2003 in order to apply and verify its innovative SMB approach for developing a portfolio of small-scale sustainable infrastructure investments. Over the past 8 years, in India, S3IDF has helped develop 185 projects (project investments ranging from $ 1000 to $ 20,000) providing sustainable infrastructure services with local job creation and additional livelihood options. These projects directly or indirectly benet in excess of around one hundred thousand people (as a result of being users of infrastructure services, or having enhanced income). Via a revolving fund, this portfolio has achieved leverage in excess of 2.5 i.e. for every dollar invested by S3IDF approximately $ 2.5 was invested by local nancial institutions, raised through development capital or as local equity. In order to develop these projects, S3IDF has worked in partnership with 12 nancial institutions, 29 technology suppliers and over 20 grass-root level organizations. SELCO Incubation Centre 39 SELCO Incubation Centre The mission of SELCO Incubation Centre is to nurture & empower the next generation of sustainable energy entrepreneurs for the under-served communities. The initiative will be leveraging on the eighteen years of experience to catapult a new league of SELCOs across India. We will seek to utilize SELCOs shared resources, management expertise, intellectual capital, and learning to enhance the capacity of potential local energy enterprises to deliver energy solutions to low-income communities by: Replicating decentralized business models and processes Providing mentorship in social enterprise management and business planning support Assisting in developing the enabling conditions to support delivery of energy services Enabling access to seed and later stage capital Establishing a platform for networking, sharing of best practices, common sourcing, etc. Supported By: GIZ ADB: Energy for all Doen Foundation The Swiss Agency for Development and Cooperation (SDC) #263, AECS Layout 1st cross, Kundalahalli Bangalore-560 037, India Ph: +91 80 4120 1681 email: info@selcoincbation.org www.selcoincubation.org