SIDBI Energy Saving Project

The SIDBI energy saving project helps MSMEs acquire, install, lease or rent energy saving equipment or facilities. Existing energy saving equipment or facilities like industrial furnaces, boilers, burners, etc., can also be augmented  by new installations, replaced, remodeled or upgraded with equipment having advance or similar performance to those of replacement,

Mostly, the scheme supports installation or development or adoption of manufacturing machinery and tools that meet the unambiguous requirements for energy performance standard provided in India like energy labels, green building, etc.,

Eligibility for Energy Saving Project

New or existing MSME units according to the definition of the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 are eligible for the MSME energy saving project,

• Existing units must have reasonable track record of past performance and good financial position.
• Units must have minimum investment grade rating of SIDBI.
• Sectors such as the arms industry, narcotics industry or any criminal businesses are not eligible.
• Correspondingly, such projects which may perhaps result in larger negative social and environmental effect are too not eligible under this scheme.

Funding under Energy Saving Project

A minimum of Rs. 10 lakh per project is sanctioned by SIDBI under the scheme. Promoters of existing units are required to infuse promoter contribution of 25%, while promoters of new units are required to infuse upto 33%. Further, debt to equity ratio of a maximum of 2:1 is only permissible.

Interest Rate & Charges

Currently, SIDBI charges 75 basis points below the related lending rate for MSMEs having appropriate credit rating. A non-refundable upfront fee of up to 2% of sanctioned loan and service tax is applicable.

Collateral Security

First charge over assets obtained under the scheme; first or second charge over existing assets as well as collateral security as may perhaps be deemed essential. Also, a minimum asset coverage of 1.4: 1 for new units and 1.3 : 1 for existing units must be maintained.

Repayment period

The repayment period and schedule is set based on the cash flow of the MSME business. Usually, the repayment period does not extend beyond a period of 7 years. However, longer repayment period of greater than 7 years can be considered, in rare cases.