The Asian Infrastructure Investment Bank (AIIB) will gve a $100-million loan to L&T Infrastructure Finance Company for wind and solar infrastructure projects in India. This is the first time AIIB is extending a loan to a non-banking finance company.
“The Asian Infrastructure Investment Bank’s latest project will increase the supply of renewable energy in India by mobilising private capital,” AIIB said in its statement. The release added, “The project provides a $100-million loan to L&T Infrastructure Finance Company (LTIF), a subsidiary of L&T Finance Holdings and a leading non-bank financier of renewable energy in India.”
L&T Infrastructure Finance’s collaboration with AIIB is also expected to help the company tap international market for finance. “The collaboration will also help the company develop its environmental and social capabilities which will in the future enable it to tap the international market for green finance,” the release added.
In its statement, AIIB said, “The loan proceeds will be used to on-lend to wind and solar power infrastructure projects throughout India.
The loan mobilises private capital from sponsors, other financiers and LTIF’s own sources.”
AIIB said investment in renewable energy is an efficient way for India to reduce its carbon intensity while meeting its growing energy needs. India has set a target to install 175 Gigawatt (GW) of renewable energy capacity by 2022, of which a total of 80.04 GW of renewable energy capacity has been installed in the country till May 2019. According to the ministry for renewable energy, bids for 46.59 GW solar and wind power capacity were invited during 2018-19."NBFCs play a crucial role in broadening access to financial services, enhancing competition and diversity in the financial sector, and has emerged as key financiers of renewable energy,” the release said.