India’s biggest bank is caught between Larry Fink and Narendra Modi. The State Bank of India must finance coal projects to meet the Indian leader’s desire to electrify more homes, but it wants to support renewable energy projects to appease investors like BlackRock Inc. For now, it wants to support renewable energy projects. does a bit of both.
“Investor concerns are very important to us, we take them into consideration,” said Ashwani Bhatia, head of corporate banking and global markets for the lender. “But we also have commitments to the country. There is so much coal mines being developed in India because we need it to produce steel, aluminum, electricity.”
The publicly listed public lender has a difficult balance with its financial support for coal-fired power plants, which are a major contributor to air pollution. International investors are increasingly restricting support for companies involved in the extraction or consumption of coal, but nearly 70% of India’s electricity comes from coal-fired power plants and the demand for electricity is expected to increase as the economy is recovering from the blows of the pandemic.
BlackRock and Norwegian Storebrand ASA, which both hold less than 1% in the bank according to Bloomberg data, have raised their objections over the past year. Amundi SA sold its holdings in the lender’s green bonds over the bank’s links to a controversial coal project in northern Australia.
The State Bank of India has not decided whether or not to help finance the Carmichael mine for Adani Enterprises Ltd, whose main shareholder is Indian billionaire Gautam Adani, following increasing pressure from climate activists and investors, reported Bloomberg in April.
Global energy financing is at a critical juncture. Green bonds and global banking sector loans have so far exceeded the value of fossil fuels for the first time since the signing of the Paris Agreement at the very end of 2015 so far this year.
In India, it will take time to move away from coal. Millions of citizens have remained without power for months after Modi’s deadline for electrifying every home passed two years ago. Earlier this year, the Environment Department further delayed anti-pollution guidelines for power plants that use fuel.
The shift from solar to thermal is happening gradually in India as companies move towards cleaner fuel technology, Bhatia said, adding that the bank is keen to finance companies that make electric cars. The bank also charges 20 basis points less on loans to individuals borrowing to purchase electric vehicles, he said.
The bank increased the share of loans to the clean energy sector and approved three times as many loans to solar projects in the fiscal year ended March than to the thermal sector as a whole, the banker said. 59 years old. This is because there had been virtually no demand for new loans from fossil fuel producers last year, he said, adding that most long-term loans for thermal projects are existing commitments.
The lender’s loans to the power sector stood at 1.86 trillion rupees ($ 25.6 billion) or 7.3% of the total at the end of March with 319.2 billion rupees in renewable energy loans, according to the latest analyst presentation of the bank. The company does not give a breakdown of its loans to coal or other segments of the power sector.
“As the largest bank in the country, we are also the largest funder of large business solar initiatives,” he said. “The shift from thermal to solar has started to happen in a significant way.”
This story was posted from an agency feed with no text editing. Only the title has been changed.
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