"Under the agreement, the World Resources Institute (WRI) will implement Esco (energy saving company) projects in the country by identifying sectors and companies, implement energy saving measures and finally certify that the companies with which it is partnering are saving energy to the level it prescribes.
"We, in turn, will fund these energy savings projects and offer these companies a repayment moratorium till they start really saving energy and begin to pay back us from this saving alone. The idea is to help these companies pay back their loans just from the money saved through saving power," IDBI Bank Executive Director and MSME Business Head TR Bajalia told reporters at an interaction here.
The six-year-old public sector lender, which is a leading name among the MSME financiers, by the end of the September quarter had an exposure of Rs 22,000 crore to the sector, out of which Rs 11,000 crore was to the micro and small sector alone, Bajalia said.
"We want to take this to Rs 25,000 crore by the end of this fiscal, after growing by over 100 per cent last fiscal," Bajalia said, adding out of this overall exposure, around two per cent are bad loans.
He further said even during the dull months of the first quarter, the bank saw its MSME lending rising by Rs 2,000 crore. The bank hopes to clock at least 20 per cent growth this fiscal, he added.
Bajalia said for the WRI, which is a leading name amongst world's top environmental research institutes, the tie-up with IDBI Bank is the second one in the country after a recent agreement it had entered into with the private sector lender Axis Bank on the same model.
In fact, the WRI was to tie up with IDBI Bank first, but for some delays from the bank's end, said Bajalia.
The WRI, which is a leader in setting up Esco projects worldwide is present in 50 countries and has over 400 partners, will identify particular sectors from within the MSME space, spot the companies from those sectors and then help them implement energy saving measures, besides arranging for loans from IDBI Bank for this purpose, said Bajalia.
He further informed that it is the responsibility of the WRI to ensure that the companies pay their loan back.
On an average, at least 25 per cent of the overall expense of any small or medium and even micro enterprise are power bills, and the WRI is of the opinion that companies can easily pay back their lender from the money saved through saving energy, said Bajalia.
Bajalia further informed that MSMEs in the foundry, textile, machine tools, and secondary steel mills among others are best suited for the Esco projects.
The Prime Minister's taskforce on MSME demands public sector banks to extend 60 per cent of their overall small and medium sector loan exposure to micro industries.