MUMBAI: Lenders are sharpening their focus on corporate credit in emerging industries, with renewable energy emerging as the biggest growth driver.
The push comes at a time when transition goals are accelerating demand for clean energy financing. In addition, the rising energy security concerns have risen due to the West Asia crisis in the recent months has led to more demand for renewable energy.
Public sector banks in particular have reported sharp increases in renewable loan books over the past year. For example, State Bank of India expanded its renewable energy portfolio by 134 % year-on-year to ₹1.49 lakh crore as of March. Bank of Baroda reported a 64% rise in renewable lending to ₹30,371 crore, while Union Bank of India grew its renewable portfolio by around 40% to ₹18,694 crore.
“We continue to focus more on the space. Term loans for renewable projects that we funded are now coming in for working capital because the projects are implemented. So that sector continues to give us a bit of extra delta going forward,” said Debadatta Chand, MD & CEO, Bank of Baroda.
In March, Bank of Baroda also launched a ₹10,000 crore green infrastructure bond issue—a first by an Indian bank aimed specifically at funding such projects.
Apart from renewables, lenders are also seeing growing opportunities in sectors such as data centres, electric vehicles, semiconductors and research and development, which are expected to generate stronger corporate credit demand over the coming years.
Chand added that the bank currently has a corporate credit pipeline of roughly ₹50,000 crore, of which ₹25,000 crore has already been sanctioned but not disbursed, while another ₹25,000 crore worth of proposals are under evaluation.
State Bank of India Chairman C S Setty, in the post-earnings call, said the bank is witnessing strong momentum across infrastructure, renewable energy, thermal power, automobile manufacturing, refineries and fertilisers, and expects demand to remain robust.
Private sector lenders are also stepping up exposure to the segment. “Renewable energy remains a key focus area for the bank, both from a growth and ESG perspective. Our book stands at ₹12,000–13,000 crore as of March and we expect to maintain strong double-digit growth over the coming years,” said Kapil Bhatia, Group President & Country Head- Corporate & Institutional Banking, Federal Bank.
Bankers said corporate borrowers have increasingly shifted toward bank funding over the past two quarters as elevated bond yields made market borrowings more expensive. Most lenders reported stronger corporate loan growth in the previous quarter and expect double-digit expansion to continue, supported by rising investments in emerging sectors.
Source: The Financial Express
