International Finance Corporation (IFC), a member of the World Bank Group, has extended support to Self-Employed Women’s Association (SEWA) in the form of a partial credit guarantee for purchase of clean energy products by SEWA members in rural areas.
In a unique financial model, IFC will only provide a partial credit guarantee for a US $ 5 million (approx. Rs 28 crore) loan, which will be taken from an Indian private sector bank to provide finance for SEWA's project. Under the project, rural women (SEWA members) will purchase an energy-efficient cook stoves and solar lanterns, costing about Rs 4800 for a pair and will make payments in 16 equal instalments of Rs 300 per month.
"This is a unique financial model where unsecured loans are being offered at as low as 15 per cent interest to rural households. IFC's guarantee will help bankers to stay confident about the borrower," said Anurag Bhatnagar, chief executive of SEWA. "There is no unsecured finance available at such low rates either from a bank or an MFI," he said.
Nearly 200,000 SEWA members, mostly in Gujarat and some in Rajasthan will benefit from the project, called Hariyali - meaning green.
"This project will launch a new financial product for the purchase of clean energy products by women in rural India," said Karin Finkelston, vice-president for Asia Pacific.
"There is no subsidy or funding available for clean energy products. Hence, we had to tie up with a private bank, ICICI Bank for the loans and IFC has extended its support for providing credit guarantee," said Reema Nanavaty, director, SEWA at a media interaction in Ahmedabad on Thursday. The project is on pilot basis, while going forward it is targeted to reach out to 1.5 million households of SEWA members over a period of time.
"Gujarat has a widely spread electricity network. But in some areas, access to electricity and affordabilty is still a drag. The project will help rural poor to have solar power-charged lantern to meet their power requirement," said Nanavaty. The project is expected to generate carbon credits by reducing greenhouse gas emissions equivalent to one million tonne of carbon dioxide over the life of the project. Several development benefits include reduction in expenses on firewood, kerosene and electricity, reduction in the risk of respiratory diseases from smoke inhalation, and improvement in ambient lighting for children to study.