SIDBI, Shell Launch USD 6-Million Risk Facility To Enhance EV Financing

Small Industries Development Bank of India (SIDBI), in collaboration with the Shell Foundation, has introduced a USD 6-million Risk Sharing Facility (RSF) aimed at enhancing financial accessibility and promoting the widespread adoption of electric two- and three-wheelers throughout India.

SIDBI, the country’s principal financial institution for MSMEs and Shell Foundation, the UK foundation that catalyses clean energy innovation in Africa and India, will contribute USD 3 million each to provide partial credit guarantee to electric vehicle (EV) ecosystem players who support EVs for commercial use.

The agreed cap is 7.5 per cent of the second loss layer that will unlock approximately USD 81 million of commercial capital for EV asset financing. The Risk Sharing Facility (RSF) will complement EV Mission 30@30 through SIDBI Mission 50K-EV4ECO (enable ecosystem to foster 50,000 EVs).

Sivasubramanian Ramann, CMD, SIDBI said, “In line with the national mission of EV30@30, SIDBI has adopted EV as the thrust segment. By launching mission 50K- EV4ECO, we are promoting the entire EV value chain.”

“RSF is an important instrument to provide initial comfort to the lenders operating in emerging and unserved or underserved segments. We expect that the Risk sharing facility for EV will address the lack of access and affordability of commercial financing due to actual and perceived risks associated with EV lending,” Ramann added.

SIDBI has been conceptualizing EV risk sharing facility/financial products with the support of multilaterals after discussing with key stakeholders and experience gained in the sector. This Risk sharing facility will be followed by scaling up support to the ecosystem from multilateral support under the EVOLVE programme.

Sudhendu J Sinha, Adviser (Infra & e-mobility), NITI Aayog said, “This pilot RSF initiative will further strengthen our resolve to move the EV ecosystem upward. It will also enable picking up of learning threads and weave the scaling up EV RSF version under bigger and broader multilateral institutional support.”

“As we know electric vehicle financing is predominantly being done by small/ unrated NBFCs. These NBFCs have deep and extensive knowledge of the EV sector. It is expected that commercial banks and NBFCs will speed up financing EV assets for commercial use. This would address the challenges of access to affordable finance,” Sinha added.

Jonathan Berman, CEO of Shell Foundation said, “This partnership with SIDBI is directly aligned with our mission to empower five million urban transporters to earn a living income by transitioning to electric mobility by 2032. The creation and launch of RSF facility will stimulate the EV Financing sector for two- and three-wheelers, which are used as income generating assets. This will scale access to two- and three-wheeler electric vehicles for 50,000 urban transporters and empower them to increase their incomes by up to 70 per cent.”