World Trade Center Mumbai organised a roundtable meeting of an Expert Group constituted by the policy research institute TERI with the support of Bloomberg Philanthropies to discuss the financing of Long Term Low Carbon Development Strategy submitted by India to the United Nations last year.

Mr. Pratyush Mehrotra, Deputy General Manager, ESG and Climate Finance Unit, State Bank of India (SBI) remarked, “SBI is the first commercial bank in India to set up a ESG and Climate Finance Unit to support Green Finance and meet the bank’s target of achieving net zero. We are committed to expand our green finance portfolio, which currently stands at Rs. 36,000 crores. We have also tied up USD 2.3 billion worth of credit lines from multilateral institutions such as the World Bank in different currencies. We will pass on the concessional terms of these credit lines to MSME borrowers implementing clean technology projects. Of this, USD 1.9 billion credit line is for renewable energy projects and the remaining for electric mobility and other clean technology projects.”

Dr. Manish Kumar Shrivastava, Associate Director – Climate Policy & Financing, TERI pointed out, “Around 93% of MSMEs in India lack access to formal credit. Only 16% of commercial bank funding goes to the MSME sector. There is Rs. 16 trillion gap in sustainable finance for MSMEs in India. Therefore, TERI has launched the Expert Group on financing MSMEs for Long Term Low Carbon Development Strategy in association with Bloomberg Philanthropies.”

This Expert Group has identified four actionable strategies to promote sustainable finance to MSMEs. These are: 1) multi-stakeholder facilitation platform 2) multi-level risk guarantee mechanism 3) supply chain linked de-carbonisation model 4) multi-sector cluster-based approach.

Sharing his views on long term low carbon development strategy, Dr. Vijay Kalantri, Chairman, WTC Mumbai remarked, “Access to sustainable finance is a distant dream for MSMEs who struggle to get even working capital loans to run day to day operations. India needs to bridge the gap in sustainable finance for MSMEs before the new carbon tax of the European Union becomes effective. RBI may expand the scope of priority sector lending norms to include de-carbonisation projects.”

Dr. Mukund Rajan, Chairperson, ECube Investment Advisors suggested measures such as allowing cluster-based common infrastructure support for MSMEs, easier access to long term External Commercial Borrowing for clean projects, extending government guarantees for sustainable finance projects, setting up a dedicated stock exchange for sustainable finance, promoting blended finance solutions and introducing carbon pricing.

Mr. Nagasimha Swamy, Manager, Environment & Social, British International Investment Advisors Pvt. Ltd. informed about the ticket size of the debt and equity capital support that his organisation provides to the green projects of MSMEs. He said his organisation extends equity capital of USD 20-50 million for MSME manufacturers, while it provides debt capital of USD 30-40 million for green projects of MSMEs.

The event was attended by sustainability consultants, bankers, MSMEs and other stakeholders.

Dr. Vijay Kalantri, Chairman, WTC Mumbai (Left) addressing the meeting. Also seen in the photograph is Mr. Arupendra Nath Mullick, Vice President, TERI Council for Business Sustainability