State-run Indian Renewable Energy Development Agency (IREDA) might be converted into a Green Bank to enable it to access funding from overseas banks. With IREDA conversion into Green Bank, it would be entitled to avail of certain benefits, which the agency is currently deprived of and the proposal is being well supported by the Union Power Ministry. A green bank provides low-cost financing support to clean and low-carbon projects.

Meanwhile, a study by IREDA, Council on Energy, Environment and Water (Indian Renewable Energy Development Agency), and Natural Resources Defense Council said that India’s goal to ramp up solar and wind energy capacity could get a major boost through two fast-growing financing innovations – green banks and green bonds. A green bank could offer lower interest charges than traditional banks and tap into international capital to finance solar and wind projects to help India power its cities and rural communities.

IREDA, an arm of the Indian government, currently appears to be the closest institutionally to a green bank, the report notes. Yet, opportunities for state level banks also appear promising. Green banks are public entities created to work with the private sector to increase investment in clean energy and bring clean energy financing into the mainstream. They are innovative and new tools that have been successful in the United Kingdom, Australia, Japan, Malaysia and several US.