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Cabinet Approves Funds for IREDA

  • 21 Jan 2022
  • 2 min read

Why in News

Recently, the Union Cabinet approved the infusion of Rs 1,500 crore in the Indian Renewable Energy Development Agency (IREDA).

  • This will enable IREDA to lend Rs 12,000 crore to the renewable energy sector.
  • Earlier, the IREDA had launched a ‘whistle-blower Portal’, as a part of ‘Vigilance Awareness Week 2021’.

Key Points

  • Significance of the Funds:
    • This equity infusion will help in employment generation of approximately 10200 jobs-year and CO2 equivalent emission reduction of approximately 7.49 Million Tonnes CO2/year.
    • Additional equity infusion of Rs.1500 crore by Government of India will enable IREDA:
      • To lend Rs.12000 crore approximately to the Renewable Energy (RE) sector, thus facilitating the debt requirement of RE of additional capacity of approximately 3500-4000 MW.
      • To enhance its networth which will help it in additional RE financing, thus contributing better to the Government of India targets for RE.
      • To improve the Capital-to-Risk weighted Assets Ratio (CRAR) to facilitate its lending and borrowing operations.
        • CRAR, also known as CAR (Capital Adequacy Ratio) is critical to ensure that financial organisations have enough cushion to absorb a reasonable amount of losses before they become insolvent.
  • IREDA:
    • IREDA is a mini ratna company under the Ministry of New and Renewable Energy (MNRE).
    • It was set up in 1987 as a specialized non-banking finance agency for the renewable energy sector.
    • IREDA plays a key role in the renewable energy project financing which gives confidence to the financial institutions/banks to lend in the sector.

Source: PIB

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