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 Climate Change

Finance
Published on: Nov. 23, 2022, 1 p.m.
Banking on green
  • Market leader: Out of 100 EVs sold, HDFC Bank is financing 15-17

By Business India Editorial

Encouraged by the results of early test lending, HDFC Bank is planning to treble its lending to electric vehicle (EV) purchases in three years.

"In line with our aim to become carbon neutral by 2031-32 we are aggressively pushing EV financing," said Vikas Pandey, business head-auto loans at HDFC Bank.

After initially testing the waters with lending for 589 EV purchases and a book size of Rs5,100 crore, the bank aims to triple the book size by 2025. "We are market leaders in passenger vehicle financing. Out of 100 EVs sold, we are financing 15-17. So, we have a market share of more than 15 per cent,” said Pandey.

Data shows 3,800 passenger EVs were sold in October, out of which HDFC Bank financed 589 vehicles. The bank disbursed such loans worth Rs170 crore in October.

"We are seeing minimum 2.5x growth this year in terms of volumes of vehicles financed," Pandey said. "From here onwards, numbers should multiply and in the next three years, we are seeing 3x growth. By 2025, we are aiming for a market share of more than 20 per cent.”

Metros and urban locations account for 80 per cent of the demand as access to charging infrastructure remains a roadblock for widespread EV adoption in the country. "Our recharging infrastructure is tilted towards urban areas, which we don't see in semi-urban and rural areas," Pandey said. There are 2,500 EV chargers across 270 cities in India. Almost 500 of these are in Maharashtra. 

The EV market in India is set to widen in the coming years. Last year, 19,500 electric passenger vehicles were sold in the country. This year, 20,500 vehicles have been sold till October. Today, the penetration of EV passenger vehicles is below 1 percent in the automobile space. India's EV financing market will likely be worth $50 billion (Rs4.1 lakh crore) by 2030 when 30 per cent of private cars, 70 per cent of commercial vehicles, and 80 per cent of two- and three-wheelers in the country are expected to use the electric powertrain.

Meanwhile, Bank of Baroda has announced it has entered into an alliance with Aerem Solutions Pvt Ltd (ASPL) and its subsidiary, Aerem Finance Pvt Ltd (AFPL), for financing of Solar Rooftop projects for captive use by MSMEs. Under the agreement, the public sector bank will provide collateral-free loans at affordable rates to MSMEs for installation of captive solar rooftop projects. Aerem Solutions enables rooftop solar installations for MSMEs, while Aerem Finance is an NBFC registered with the Reserve Bank of India.

"Bank of Baroda has introduced a collateral-free scheme to finance solar rooftop projects for captive use by MSMEs and this arrangement with AEREM provides the Bank access to progressive MSMEs who are keen to employ solar energy, thereby reducing their carbon footprint and improving profitability,” said Dhrubashish Bhattacharya, Head – MSME Business, Bank of Baroda. 

“Our innovative SolarTech platform ensures quality rooftop solar systems, which combined with collateral-free finance enables significant reduction in power bills of MSMEs,” said Anand Jain, Founder and CEO, AEREM.


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