On 13th March 2023, the Reserve Bank of India (RBI) announced that it had granted IFC status (Infrastructure Finance Company) to Indian Renewable Energy Development Agency (IREDA), which was earlier classified as an ‘Investment and Credit Company (ICC).
IREDA, a Mini Ratna (Category – I) Government of India Enterprise, operates under the Ministry of New and Renewable Energy (MNRE). Established as a Non-Banking Financial Institution in 1987, IREDA champions the cause of sustainable energy by developing and extending financial assistance for cutting-edge projects that harness new and renewable energy sources. IREDA‘s portfolio of supported technologies includes solar, wind, hydro, bio-energy, waste-to-energy, energy efficiency, e-mobility, biofuel, emerging technologies, and more.
What does this move mean? What could be its potential impact on IREDA and the energy industry? Let’s read below.
The IFC recognition by RBI will enable IREDA to take on higher exposure in renewable energy financing while also accessing a wider investor base for fund mobilisation. This recognition is also being viewed as a testament to IREDA‘s 36 years of dedicated infrastructure financing and development, with a particular focus on renewable energy. The move is also a positive push for IREDA’s brand value and market image.
Further, with the IFC status, IREDA is better equipped to contribute towards the Indian government’s target of 500 GW of installed non-fossil fuel capacity by 2030.
Chairman and Managing Director of IREDA, Mr. Pradip Kumar Das, is confident that IREDA‘s IFC status is a major boost for the company’s efforts to create a sustainable energy future for India.
Let’s quickly glance at some financial data of IREDA.
For FY22-23, The company reported an all-time high Profit After Tax (PAT) of Rs. 865 crores. IREDA also achieved an all-time high annual loan disbursement of Rs. 21,639 crores and a sanction of Rs. 32,587 crores in FY23. As of 31st March, the majority loan allocation (nearly 31%) was made to solar energy, followed by wind energy (21%) and state utilities (23%).
Interestingly, the Indian Government approved listing IREDA in 2019 and now aims to go public with the same by FY24. Also, in Jan 2022, the Cabinet approved a capital infusion of Rs. 1,500 crores. It is believed that this infusion will enable IREDA to lend an additional Rs. 12,000 crore to the renewable energy sector, meeting the debt requirements for an additional capacity of 3,500-4,000 MW. Further, the IPO is expected to generate 10,200 jobs annually while also contributing to a reduction in CO2 equivalent emissions by about 7.49 million tonnes.
With enhanced financial capabilities and increased investor confidence, the Chennai-headquartered IREDA is well-positioned to accelerate the adoption of renewable energy technologies and positively impact the environment and society.