Microfinance has been successful at bringing solar lighting to India’s rural villages, according to an article in Indian science and environment magazine Down To Earth. Solar home lighting systems often cost about INR 14,000 (about USD 280), a prohibitive price for most households living in areas with limited electricity. In the state of Uttar Pradesh, rural bank Prathama Bank offers the Prathama Solar Jyoti financing scheme, which allows customers to pay for SHLS in installments of about INR 300 (about USD 6) per month, an amount that is reportedly much lower than the monthly cost of kerosene lighting. Details on interest rates and loan periods are not available. Prathama Solar Jyoti has helped provide 29,000 SHLSs reaching 75 percent of households in 21 villages in western Uttar Pradesh.
Solar technology providers have also partnered with other financial institutions to deliver similar programs. Tata BP Solar, a joint venture between Indian Tata Power Company and British Petroleum’s BP Solar, for instance, has sold nearly 80,000 SHLSs in Uttar Pradesh through tie-ups with regional rural banks such as Aryavart Gramin Bank and Gomti-Kashi Bank in addition to Prathama. Solar Electric Lighting Company (SELCO), another provider, reportedly has partnered with four commercial banks and nine rural banks to make SHLSs available to 120,000 households, mostly in the state of Karnataka.
R C Virmani, chairman of Prathama, was quoted as having said, “Thousands of villages [have] no grid electricity connection in India and villages that are connected to the grid have irregular access to electricity. This is a huge market for solar energy if the credit options are available to the rural masses.”
Prathama reports total assets of INR 39.3 billion (USD 805 million), and Aryavart Gramin Bank reports assets of INR 51.1 billion (USD 1 billion). Financial data is not available on Gomti-Kashi Bank.
By Kristha Abores, Research Associate
About Prathama Bank:
Headquartered in Moradabad, India, Prathama Bank is a regional rural bank established on October 2, 1975. It has 212 branches and has approximately 2.5 million clients. Prathama reports on its website total assets of INR 39.3 billion (USD 805 million) and return on assets (ROA) of 1.81 percent as of March 2011.
About Aryavart Gramin Bank:
Aryavart Gramin Bank (AGB), a regional rural bank based in Lucknow, India, was formed on October 3, 2006, through the consolidation of Avadh Gramin Bank, Barabanki Gramin Bank and Farrukhabad Gramin Bank. It has 311 branches and operates in six districts in the state of Uttar Pradesh: Lucknow, Barabanki, Farrukhabad, Hardoi, Kannauj and Unnao. Its programs include rural housing finance, solar home lighting system loans and financial assistance for farmers. AGB reports on its website total assets of INR 51.1 billion (USD 1 billion) and net profit of INR 848 million (USD 17.3 million) as of March 2011.
Sources and Additional Resources:
[1] Down To Earth: “Microcredit scheme for solar lighting system”, http://www.downtoearth.org.in/content/microcredit-scheme-solar-lighting-system
MicroCapital.org article, June 3, 2011, “MICROCAPITAL BRIEF: Union Bank of India (UBI) Launching Microfinance Schemes Under ‘unioninclusions’”, https://www.microcapital.org/microcapital-brief-union-bank-of-india-ubi-launching-microfinance-schemes-under-%E2%80%9Cunioninclusions%E2%80%9D-2/
MicroCapital.org article, July 19, 2010, “MICROCAPITAL BRIEF: United Nations Environment Programme (UNEP) Invests $1.8m in Solar Panels in Nepal, to be Distributed via Microloans Disbursed by Ace Development Bank, Provider of Microfinance and Traditional Banking Services”, https://www.microcapital.org/microcapital-brief-united-nations-environment-programme-unep-invests-1-8m-in-solar-panels-in-nepal-to-be-distributed-via-microloans-disbursed-by-ace-development-bank-provider-of-microfinance-and/
MicroCapital Universe Profile: Prathama Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Prathama+Bank
MicroCapital Universe Profile: Aryavart Gramin Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Aryavart+Gramin+Bank
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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