Impact investors and development finance institutions have been instrumental in building a market for green lending for India’s tens of millions of micro and small businesses. The Finnish, Dutch and British development banks contributed to a $42 million funding round for Mumbai-based Ecofy to provide credit for business owners to install rooftop solar or buy an electric vehicle.
Ecofy has partnered with equipment manufacturers and other financial institutions to make green loans available to more than 120,000 borrowers.
British International Investment’s Shilpa Kumar said Ecofy’s retail financing “is enabling households and small businesses across India to access affordable climate solutions.”
“India’s green finance sector is entering a disciplined, early‑growth phase where strong risk management will distinguish long‑term winners,” said Finnfund’s Tuomas Vaulanen.
In addition to backing from Finnfund, BII and FMO, sustainable infrastructure investor Eversource Capital reupped its commitment in the new round.
Making a green credit market
India has an established ecosystem of “non-bank financial institutions” – private credit providers that primarily serve households and micro and small businesses that mainstream banks don’t. Until a few years ago, few offered loan products for off-grid solar installations, electric vehicles or energy efficiency upgrades, despite customers’ appetite.
The state-run Small Industries Development Bank of India is one of the biggest catalysts in India’s green small business loan market, deploying over $1 billion and aiming to scale up by an additional $4 billion.
BII and Swiss impact investor Symbiotics have initiated two green “basket bonds” to capitalize emerging market green lenders; India is their biggest market.
