India secures loan from Germany to develop an energy-efficient housing programme

India has secured a US $277 million (about Rs.1,900 crore) loan from Germany to establish an energy-efficient housing programme in the country. The loan agreement was signed between State Bank of India (SBI) and Germany’s KfW Development Bank for US $277 million to establish an energy-efficient housing programme in India.

About SBI-KfW agreement for Energy-Efficient Housing Programme

The programme shall be part of Indo-German Development Co-operation, guided by 2030 Agenda for Sustainable Development (SDG). The financial cooperation pact was signed between Government of India and Government of Germany in October 2019.

Under SBI-KfW programme:- Both homebuyers and builders will be financed for purchasing or developing energy-efficient residential projects that achieve at least 25% energy savings in comparison to standard reference buildings. Therefore, this programme will contribute to India’s policy framework towards energy conservation in residential building sector as well as reduction in GHG (greenhouse gas) emissions.

Financing of Programme

In addition to US $277 million loan, the KfW will also extend a grant of 1.5 million euros (about Rs.12 crore) as a technical assistance package. This technical assistance funds shall be used for supporting SBI in preparation, implementation and monitoring of programme.

Furthermore, an investment grant of 10 million euro (about Rs.791 crore) has also been provided, so as to incentivise builders towards developing housing projects that achieve significantly higher levels of energy savings vis-a-vis standard reference buildings (i.e. at least 40% savings). The arrangement of loan and grant facilities will be facilitated by SBI Capital Markets Ltd., which is SBI’s investment banking subsidiary.

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