IREDA’s Gross NPAs Rose to 6 Percent in FY 2016-17
Wind projects constitute 34.28 percent of IREDA’s loan portfolio, while solar occupies approximately 25.12 percent
March 15, 2018
The Indian Renewable Energy Development Agency (IREDA)’s gross non-performing assets (NPAs) rose to 6.01 percent of its total assets in the financial year (FY) 2016-17. The net NPAs of IREDA for FY 2016-17 stood at ₹5 billion (~$77 million).
There is a 0.30 percent increase in the gross NPAs of IREDA when compared to the preceding FY 2015-16, in which the gross NPAs comprised 5.71 percent of its total assets.
Addressing a question in Parliament, the Minister for Power, R.K. Singh said, “During the last three years, IREDA’s gross NPA has increased from 5.3 percent to 6.01 percent of their total assets. However, IREDA has been able to contain net NPA to a level of 3.77 percent as on March 31, 2017.”
“IREDA, being a dedicated non-banking financial company (NBFC) for financing renewable energy projects in the country, is required to finance renewable energy projects in the sector. During the last three years, the major focus areas of financing have been wind and solar sectors in line with the government of India’s target for installing 175 GW of renewable energy capacity by 2022,” Singh added.
While the wind projects constitute 34.28 percent of IREDA’s loan portfolio, solar occupies approximately 25.12 percent of IREDA’s loan portfolio.
Replying to a question on the steps taken by IREDA to cut down NPAs, Singh said, “The NPAs of IREDA are mainly in biomass, cogeneration, and small hydro and energy efficiency (EE) sectors. IREDA has already taken corrective action in this regard and stopped funding in biomass and EE sectors since the last three years. IREDA has also decided that its exposure in small hydro and cogeneration shall not exceed 50 percent of the project cost as against 70 percent of the project cost earlier.”
Singh also informed the Rajya Sabha that IREDA is also getting the assessment of hydrology and evacuation done from Alternate Hydro Energy Centre (AHEC), Roorkee in the small hydro sector. Wherever there has been an increase in NPAs, corrective steps have been taken to minimize the occurrence of NPAs by obtaining external rating from rating agencies and reviewing IREDA’s exposure, strengthening the due diligence of the projects and promoters.
IREDA has been lending above the State Bank of India’s (SBI) Marginal Cost of Fund Based Lending Rate (MCLR). IREDA’s lending rates range between 9.50 percent and 11.25 percent depending upon the credit profile of the customer. These rates are above the MCLR of SBI, the largest Public Sector Bank (PSB).
To increase its funding capacity for renewable energy projects, IREDA is all set for the launch of its Initial Public Offering (IPO).
Mercom had previously reported that IREDA has received a green signal from the Securities and Exchange Board of India (SEBI) for the launch of its IPO.
Recently, the European Investment Bank (EIB) and IREDA inked an agreement worth €150 million (~$184.81 million) to further the growth of renewable energy generation in India.
IREDA has also entered into a $35 million sub-loan agreement with the Rewa Ultra Mega Solar (RUMSL) for the development of the Rewa and Mandsaur solar projects in the state of Madhya Pradesh.
Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.