Banks have been asked to finalise their finance schemes for solar water heaters. At an interaction with banks and financial institutions on behalf of the ministry of new and renewable energy, the Indian Renewable Energy Development Agency reviewed the progress made by banks on the interest subsidy scheme on solar water heating systems being implemented by the banks and chalk out an action plan for the future.

Speaking at the occasion V Subramanian, secretary, ministry of new and renewable energy has asked banks and the financial institutions to gear up their branches to expand their financing of solar water heating equipment keeping in view the approaching winter season. The meeting was attended by around 50 officials from 16 banks/ financial institutions, some state nodal agencies and manufacturers.

So far 2 million square meters of collectors have been installed in the country. Of this nearly 1 million square meter has been added during the last two and a half years under an accelerated programme initiated during 2005-06.

The ministry has set a goal of adding a collector area of 5 million square meters during the 11th Plan period up to 2012, which includes 6 lakh sq. m. during current year. .

To encourage users in different categories to go in for the installation of solar water heating systems, the ministry is providing interest subsidy through various branches of public sector banks and other financial institutions. At present 28 banks and financial institutions are participating in implementing the programme.

Loans at subsidised interest rates of 2 per cent for domestic systems, 3 per cent for institutional systems and 5 per cent for commercial and industrial systems are currently available.

It was noted at the meeting that the volume of business by banks and financial institutions under the interest subsidy scheme has been low when compared to the total business being done in this sector which reached Rs400 crore during 2006-07.

In order to generate greater lending to this sector, it was suggested that banks adopt various measures which included easy availability of loans to the users at effective interest rate of 2 per cent, 3 per cent and 5 per cent, with a simplification of loan procedures, tie ups between banks and manufactures and suppliers for easy availability of loans, and organizing adequate publicity and training at the branch level.