Bank credit to the renewable energy sector climbed 7% to Rs 13,852 crore in April over March outstanding, although overall bank credit contracted 0.7% in the first month of the fiscal, latest regulatory data showed.
The green sector also saw the highest month-on-month bank loan growth among all priority sector verticals. On a year-on-year basis, the growth print was recorded at 15.6% against the banking sector’s 16% loan expansion.
“The ongoing geopolitical tensions and concerns around energy security have further reinforced India’s commitment to renewable energy and the energy transition agenda, leading to a sustained increase in credit demand from the sector,” Indian Bank managing director Binod Kumar said.
Canara Bank managing director Brajesh Kumar Singh agreed that credit demand from the green and solar energy sector has been on a rise given the changing geopolitical dynamics.
India added a record 44.6 gigawatt of solar capacity in FY26, taking cumulative installed solar capacity to about 150 gigawatt and making the country the world’s third-largest solar market, PL Capital said in a note.
“The geopolitical climate could well increase focus on the physical climate, covering both mitigation finance such as renewable power and adaptation/ resilience finance such as water conservation where the gap between supply and need is larger,” said Vujay Mani, partner at Deloitte India. “Banks will have to build more specialised underwriting capabilities across the eight sunrise sectors in focus for the economy,” he added. Speaking to analysts last month after the fourth qarter earnings, State Bank of India chairman C S Setty said that sunrise sectors like green hydrogen or emerging renewable energy models are showing greater potential for investment. Indian Bank is said to be emphasising on lending to infrastructure like solar module manufacturing, city gas distribution and smart metering.
India’s solar sector is entering a structural multi-year growth phase, supported by record capacity additions, strong policy support, and rapid localisation in manufacturing, PL Capital analyst Praveen Sahay said in the note.
The growth has been broadbased, supported by the government-backed production linked incentive scheme.