As the world turns to sustainable energy, biomass pellet plants are becoming a viable, eco-friendly option. In India, several financial institutions offer loan facilities tailored for entrepreneurs looking to enter this green sector.
Best 5 Banks Providing Loans for Biomass Pellet Plant in India
Small Industries Development Bank of India (SIDBI)
- Collateral-Free Loans via CGTMSE: SIDBI supports MSMEs with loans up to ₹5 crore under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), offering collateral-free credit for biomass plant setups.
National Bank for Agriculture and Rural Development (NABARD)
- Partner in Rural Energy Projects: NABARD routinely finances agricultural and rural energy infrastructure, including biomass ventures, leveraging its priority-sector lending mandate.
State Bank of India (SBI)
- Term Loan Scheme for Biofuel Plants: SBI offers term loans up to ₹50 crore, along with working capital, LCs, and BGs. Interest rates range between 8.40–12.25%, with repayment tenures of 10–12 years, and a 6-month moratorium. Projects under ₹2 crore can qualify for collateral-waiver under CGTMSE; margins are ~30% for term loan and ~25% for working capital.
Indian Bank
- MSME-Focused Schemes: Targeted at entrepreneurs with LOIs from NTPC, Indian Bank offers financing for biomass pellet units via bespoke MSME schemes.
IREDA (Indian Renewable Energy Development Agency)
- Strategic Renewable Energy Loans: IREDA supports biomass, briquette, torrefied pellet, and RDF manufacturing with loans starting at ₹50 lakh. Financing varies—from 70% of project cost for sub-₹5 crore setups to 50% for projects above ₹10 crore. Interest rates track project grading (10.25–11.45%), with a repayment window of up to six years plus a 12-month moratorium. Security norms include hypothecation of assets and pledge of at least 51% promoter shares.
Why These Lenders Stand Out
- SBI & IREDA: Ideal for large-scale setups due to significant loan amounts and wide product suites.
- SIDBI & CGTMSE: Perfect for emerging MSMEs seeking easier access and minimal collateral.
- Indian Bank & NABARD: Suited for mid-level projects, especially in rural and agricultural segments.
Tips for Loan Preparation
- Secure offtake MOUs: Especially when targeting SBI’s schemes or IREDA, firm buyer agreements (e.g., NTPC, OMCs) are crucial.
- Plan equity contributions: A promoter contribution of 30–50% boosts chances with most institutions.
- Collect technical and financial reports: Project feasibility and biomass supply chain validation are essential, especially with IREDA.
- Check for subsidies or CFA: The Ministry of New & Renewable Energy (MNRE) often offers central assistance for biomass projects.
Conclusion
India’s push towards circular economy and green energy makes biomass pellet plants strategically important. Banks and institutions are aligning financial products to support sustainable agro-industrial growth. With global trends encouraging cleaner fuels, financing avenues are likely to expand, offering competitive green loans and policy-backed incentives.
Whether you’re launching a small rural pellet unit or planning an industrial-scale plant, India’s financial ecosystem offers diverse support through SIDBI, NABARD, SBI, Indian Bank, and IREDA. Proper planning—coupled with solid documentation and partnerships—can unlock favourable loan terms and position your venture at the forefront of India’s renewable revolution.
Disclaimer: The information provided in this content is for general informational purposes only. We (Satyajit Renewable Engineering Pvt. Ltd.) do not intend to promote, endorse, or encourage any specific action based on this information. Readers are strongly advised to conduct their own independent research and consult with relevant experts before making any decisions.