One of the largest Indian renewable power producers with a 3.92 GW capacity, Hyderabad-based Mytrah Energy Ltd plans to raise around Rs 130 billion, including Rs 26 billion in green bonds, over the next two years.
Though the company is looking to raise funds only in the domestic market, it feels fund raising in India has become difficult after 16 out of 20 PSU banks have been put in Prompt Corrective Action list of the Reserve Bank of India.
While taking the decision on putting a bank under PCA, the RBI assesses its standing on three counts, namely capital adequacy ratio (CAR), net NPAs, and return on assets (RoA).
Banks become PCA candidates when they feel the minimum requirements of CAR or net NPAs rise above 6 per cent or the RoA is negative for two years. Breach of any one condition is seen as sufficient to trigger PCA. This puts a restrictions on bank lending.
Green bonds have become one of the most prevalent mediums in the debt capital market as an alternative to traditional bank financing, “Some $2.4 trillion has been raised in the last two years alone. Yes Bank was the first institution to issue Green Infra bonds in February 2015 and has raised in excess of $165 million till date.
The company is yet to chart out details of green bond offering. Since yields have gone up in the domestic market the fund raising is becoming tight especially when banks were stuck with bad loans.
Reference- Business Standard, RBI website