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Banking on Electric
Vehicles in India
Report /
Jan 2022
A Blueprint for Inclusion of EVs in Priority
Sector Lending Guidelines www.rmi-india.org /
2Banking on Electric Vehicles in India
Authors & Acknowledgments
Authors
Randheer Singh, NITI Aayog
Akshima Ghate, RMI India
Isha Kulkarni, RMI India
Clay Stranger, RMI
Ryan Laemel, RMI
Contacts
For more information, contact indiainfo@rmi.org
Acknowledgments
The authors are grateful for the time and insights offered by industry experts that
participated in the survey that formed the basis of the recommendations offered in this
report. The authors also thank the following individuals for offering their insights and
perspectives on this work:
RMI Samhita Shiledar
RMI India Chetna Nagpal, Dimpy Suneja, Raghav Anand
Axis Bank Sumit Bali
cKers Finance Nishant Goel, Jayant Prasad
Flipkart Dharashree Panda, Mahesh Pratap Singh
Micelio Vidya Shankar M
RevFin Sameer Aggarwal
Independent Contributor Ankit Jain
Suggested Citation
NITI Aayog, RMI, and RMI India, Banking on Electric Vehicles in India: A Blueprint for
Inclusion of EVs in Priority Sector Lending Guidelines, January 2022. www.rmi.org/
insight/banking-on-electric-vehicles-in-india.
Available at RMI India:
https://rmi-india.org/insight/banking-on-electric-vehicles-in-india.
Available at RMI:
https://rmi.org/insight/banking-on-electric-vehicles-in-india.
All images used are from iStock.com/Shutterstock.com unless otherwise noted. www.rmi-india.org /
3Banking on Electric Vehicles in India
About NITI Aayog
The National Institution for Transforming India (NITI Aayog) was formed via a resolution
of the Union Cabinet on 1 January 2015. NITI Aayog is the premier policy ‘Think Tank’ of
the Government of India, providing both directional and policy inputs. While designing
strategic and long-term policies and programmes for the Government of India, NITI
Aayog also provides relevant technical advice to the Centre and States. The Government
of India, in keeping with its reform agenda, constituted the NITI Aayog to replace the
Planning Commission instituted in 1950. This was done in order to better serve the
needs and aspirations of the people of India. An important evolutionary change from the
past, NITI Aayog acts as the quintessential platform of the Government of India to bring
States to act together in national interest, and thereby fosters Cooperative Federalism.
About RMI
RMI is an independent nonprofit founded in 1982 that transforms global energy systems
through market-driven solutions to align with a 1.5°C future and secure a clean,
prosperous, zero-carbon future for all. We work in the world’s most critical geographies
and engage businesses, policymakers, communities, and NGOs to identify and scale
energy system interventions that will cut greenhouse gas emissions at least 50 percent
by 2030. RMI has offices in Basalt and Boulder, Colorado; New York City; Oakland,
California; Washington, D.C.; and Beijing.
About RMI India
RMI India is an independent think-and-do tank. RMI India takes inspiration from and collaborates with RMI, a 40-year-old non-governmental organisation. RMI India’s mission is to accelerate India’s transition to a clean, prosperous, and inclusive energy future.
About Us www.rmi-india.org /
4Banking on Electric Vehicles in India
Table of Contents
Introduction: India’s EV Transition and
the Role of Finance
6
Conclusion: Helping India Bank on EVs25
Design Considerations for Priority Sector Lending
Guidelines for EVs
19
Overview of Priority Sector Lending
and the Opportunity for EVs
11
Endnotes26
Highlights5
Next Steps and Enablers23 www.rmi-india.org /
5Banking on Electric Vehicles in India
Highlights
• Cumulative investment in India’s
e
lectric vehicle (EV) transition could
be as large as INR 19.7 lakh crore
($US266 billion) between 2020 and
2030, highlighting the need for higher
liquidity and lower cost of capital for EV
assets and infrastructure. The recently
announced first-loss risk-sharing instrument
led by NITI Aayog and the World Bank has the
potential to meet this gap.
•
Including EVs in the Reserve Bank of India’s
priority sector lending (PSL) guidelines can
complement the $US300 million facility and
encourage the financial sector to mobilise
necessary capital.
•
Priority sector lending mandates certain banks to
direct a specified percentage of bank credit to priority sectors. Inclusion for retail lending to EVs
has the potential to increase investor confidence by providing a market signal of ongoing government
commitment to the sector. It can also ensure
a swift and equitable transition by providing a
mandate for financial institutions to direct credit to segments and use cases where credit deficiency
persists despite compelling economics.
•
Electric two- and three-wheelers, as well as four-
wheelers in commercial use cases, represent favourable segments towards inclusion of EVs in priority sector lending due to greater need for formal credit, higher potential for job creation and scale in urban and rural areas, relatively high sales forecasts, greater model availability, and smaller gap to parity in total cost of ownership.
•
To operationalise the concept of including EVs
in priority sector lending, central government policymakers can liaise with the Reserve Bank of India to design and issue the requisite guidelines. Financial institutions and the EV ecosystem can contribute by outlining how PSL inclusion can influence their growth and investment plans. This report can serve as the basis for this discussion.
•
While this intervention is promising, it will
not solve the financing challenges alone and a variety of persistent risks to EV finance remain. Additional policy and market measures to address those challenges include state-level fiscal incentives, open data on vehicle performance, industry-led buyback programmes, and loan guarantee facilities. www.rmi-india.org /
6Banking on Electric Vehicles in India
Opportunity: Recent
investments in India’s EV
ecosystem
India’s commitment to the EV30@30 initiative—to
reach a 30 percent sales share for EVs by 2030—
presents a cumulative investment opportunity of as
large as INR 19.7 lakh crore ($US266 billion).
1
There
has been a recent increase in public budgetary
allocations and corporate investment in EVs in order
to achieve this (see Exhibit 1). Central and state
governments have approved fiscal incentives for
EVs, charging infrastructure, and manufacturing
that are helping achieve parity in total cost of
ownership with internal combustion engine (ICE)
vehicles for several segments and use cases. Original
equipment manufacturers (OEMs) and component
manufacturers are investing in indigenous
manufacturing and supply chains. EV startups are
attracting significant venture funding due to their
product and business model innovation, capturing as
well as creating the market opportunity presented
by EVs.
Introduction: India’s EV
Transition and the Role of
Finance
Stakeholder(s) Initiative(s)
Department of Heavy Industry (DHI), Government of India
Revision of Faster Adoption and Manufacturing of Electric Vehicles Phase II (FAME II) demand incentives for electric 2-wheelers (e-2W) from INR 10,000 per kWh to INR 15,000 per kWh. Incentive cap increased from 20 percent to 40 percent of the capital cost of the e-2W. Energy Efficiency Services Limited (EESL) will be responsible for aggregating and leasing 3 lakh electric 3-wheelers (e-3W) as well as electric buses (e-buses) available under FAME II.
2
Government of India Production-Linked Incentive (PLI) scheme worth INR 18,100 crores (US$2.4 billion) approved for investments in advanced chemistry cell (ACC) battery manufacturing and worth INR 26,058 crore (US$3.5 billion) approved for automotive manufacturing focusing on EVs and hydrogen fuel cell vehicles.
3
State governments State EV policies of Assam, Goa, Gujarat, Himachal Pradesh, Meghalaya, Odisha, Rajasthan, and West Bengal notified. Maharashtra EV policy revised to offer additional demand, supply, and charging infrastructure.
4
Karnataka EV policy
undergoing a set of revisions, including the announcement of capital subsidies for manufacturing and initial proposals for demand incentives and other concessions for EVs.
5
Exhibit 1Key capital commitment and deployment for electric mobility in India between January and December 2021. www.rmi-india.org /
7Banking on Electric Vehicles in India
E-commerce,
fleet operators/
aggregators
Companies including Amazon, Capgemini, Dalmia Cement, JSW Cement, and
Zomato made new commitments to 100 percent electrification of their fleets in
India between 2030 and 2040.
6
OEMs, EV component
and battery
manufacturers, EVSE
companies
Companies including Ashok Leyland, Mahindra & Mahindra, Omega Seiki Mobility,
Simple Energy, and Tata Motors made announcements to invest a total of over
INR 48,000 crores (US$6.5 billion) in electric vehicles, components, and battery
manufacturing; electric vehicle supply equipment (EVSE); research and
development (R&D); and deployment in 2021.
7
EV startups Startups including Hero Electric, Magenta, and Ola Electric raised venture
funding of nearly INR 3,307 crores (US$446 million) for EV/component/battery
manufacturing and EVSE in 2021.
8
Financial institutionsAxis Bank and the United Kingdom’s Private Infrastructure Development Group
(PIDG) announced a capital financing guarantee of INR 1,500 crores (US$200
million) towards manufacturing, distribution, and servicing of EVs, batteries,
components, and charging infrastructure.
9
Exhibit 2Key investment announcements in India (in INR thousand crores) totalling INR 48,000
crores (US$6.5 billion), January–December 2021
47%
32%
6%
5%
5%
5%
Tata Motors
22,500
Mahindra3,000
Ola Electric2,350
Simple Energy2,500
Omega Seiki2,230
Other Investments15,635 www.rmi-india.org /
8Banking on Electric Vehicles in India
Challenge: Low Liquidity for EVs in
Today’s Market
The public and private sector investments and
initiatives in the EV ecosystem are accelerating capital
deployment towards India’s electric mobility transition.
Government of India flagship initiatives FAME II, PLI
for ACC batteries and automotive manufacturing alone
total INR 0.6 lakh crores ($US7.5 billion). Ola Electric
alone is currently worth INR 0.2 lakh crores ($US3
billion).
11
However, in terms of sales, EVs represent a
little over 1 percent of the market.
12
At the same time, retail lending to support consumers
and institutions in financing EVs has been slow to pick
up. Financial institutions (FIs) have not yet increased
lending to the level that would be required—an
estimated INR 40,000 crores ($US5 billion) by 2025
and INR 3.7 lakh crores ($US50 billion) by 2030.
13
Given the nascency of EV technology and adoption,
FIs such as banks and non-banking finance companies
(NBFCs) are not lending to EVs due to associated
asset and business model risks (see Exhibit 3). These
risks are both real (e.g., uncertainty of resale value)
and perceived (e.g., product quality). As a result, if
financing is available, EV buyers are unable to obtain
terms (i.e., interest rates and tenures) that are
comparable to ICE vehicles.
Exhibit 3Challenges and risks encountered in financing EVs
14
Underlying Causes
BUSINESS MODEL RISK
Operations and
Maintenance Risk
Customer Risk
Utilisation Risk
ASSET RISK
Technology Risk
Policy Risk
Manufacturer Risk
Resale Risk
Low
confidence of
financing
Key Challenges
High Interest Rates
Interest rates of 20% or more
(2x of petrol diesel vehicles)
Low Loan-To-Value Ratio
Down payment between 25%
and 50% for EVs, including capital-
intensive e-buses
Limited Financing Options
Few dedicated EV loan products
outside of e-rickshaw loans and SBI’s
Green Car Scheme
Short Loan Tenures
Tenures shorter than ICE vehicle
loans by several months, increasing the
equated monthly installment (EMI) www.rmi-india.org /
9Banking on Electric Vehicles in India
Governments across the world are recognising this
challenge and are introducing supportive measures
to facilitate easier financing of EVs. Exhibit 4 shows
a few prominent examples.
In India, NITI Aayog and the World Bank are
setting up a $US300 million first-loss risk-sharing
instrument. The instrument is intended to act as a
hedging and guaranteeing mechanism that banks
and NBFCs can access in the event of payment
delays on EV loans. The programme is expected to
bring down the financing costs for EVs by 10–12 percent.
Up to $US1.5 billion could be mobilised as a result of
the instrument.
16
This availability of credit will greatly enhance liquidity
for EVs. Simultaneously, there is a need for
complementary regulatory measures that support
the risk-sharing instrument and provide an incentive
for FIs to finance EVs.
Exhibit 4International examples of government support to financing EVs
15
Country Government Entity Intervention Description
Australia Clean Energy Finance Corporation
Risk-sharing mechanism
Australia’s public green bank partners with private banks to share risks and set up green vehicle loan schemes through an Asset Finance program.
United Kingdom Transport Scotland Interest rate-free loans
The Scottish Government agency offers interest-free loans for cars, motorcycles, and scooters with longer repayment periods.
United States of America
California State State EV authority
California State Bill 633 established an authority to lower EV capital with incentives, rebates, tax credits, loan guarantees, seed funds, and matching grants. www.rmi-india.org /
10Banking on Electric Vehicles in India
The Potential of Priority Sector
Lending to Catalyse EV Finance
Priority sector lending (PSL) has the potential to
institutionalise the role of finance in India’s EV
transition. The PSL guidelines by the Reserve Bank
of India (RBI) mandate that scheduled commercial
banks allocate specific levels of bank credit towards
priority sectors (see the next section for more detail).
In 2019, public-sector banks led by State Bank of
India (SBI) requested priority sector recognition for
retail lending to EVs. The Federation of Indian
Chambers of Commerce and Industry (FICCI) and
NITI Aayog have advocated for the same as well.
17
Including EVs as a priority sector has potential to:
Purpose of This Report
This report, Banking on Electric Vehicles in India, aims to:
•
Outline the structure, mechanics, and history of PSL
• Propose considerations to inform the design of guidelines for including EVs in the PSL guidelines
• Summarise actions needed to implement and ensure the success of EVs as a priority sector
Increase investor
confidence by providing an
additional market signal
that complements central
and state governments’
existing planning and
policies.
Ensure a swift and
equitable transition by
guiding FIs to increase
credit penetration in
credit-deficient segments
and use cases.
Accelerate EV adoption
by instituting regulatory
measures that help EVs
access more finance. www.rmi-india.org /
11Banking on Electric Vehicles in India
Overview of Priority Sector
Lending and the Opportunity
for EVs
What is Priority Sector
Lending?
The Reserve Bank of India (RBI) introduced the
priority sector lending (PSL) guidelines in 1972
to expand financial access to vulnerable sections of
society by enhancing credit for “priority” sectors with
high employment and poverty alleviation potential
but low bankability.
18
The guidelines mandate that banks subjected to the
regulation direct a specified target percentage of
adjusted net bank credit (ANBC)
19
to priority sectors
(see Exhibit 5). Current priority sectors that can
receive this credit include agriculture; micro, medium,
and small enterprises (MSMEs); housing; renewable
energy; education; social infrastructure; export credit;
self-help groups and startups; and weaker sections
of society. Of these, agriculture, microenterprises,
and weaker sections have sub-targets that all banks
are required to achieve. Also, different types of
banks are required to meet different priority sector
targets, based on their regional spread and access to
priority sectors.
Exhibit 5Targets and sub-targets set under priority sector lending
20
CategoryScheduled commercial banks (SCBs) Regional rural
banks
Small finance banks
Domestic commercial
banks (public or private)
and foreign banks with
over 20 branches
Foreign banks with less
than 20 branches
No. of banks 22 (private), 18
(public), 3 (foreign)
404310
Target
All priority sectors 40 percent of ANBC 40 percent of ANBC,
of which at least 8
percent has to be
lending to non-export
categories.
75 percent of ANBC,
of which up to 15
percent can be to
medium enterprises,
renewable energy, or
social infrastructure
75 percent of ANBC
Sub-Target
Agriculture18 percent of ANBC,
of which 10 percent is
prescribed for small
and marginal farmers
No sub-targets apply 18 percent of ANBC,
of which 10 percent is
prescribed for small
and marginal farmers
18 percent of ANBC,
of which 10 percent is
prescribed for small
and marginal farmers
Micro enterprises 7.5 percent of ANBC7.5 percent of ANBC 7.5 percent of ANBC
Weaker sections of
society
12 percent of ANBC15 percent of ANBC 12 percent of ANBC www.rmi-india.org /
12Banking on Electric Vehicles in India
Tradable PSL certificates allow banks with excess
lending to sell credits to banks that are unable to meet
requirements (see Exhibit 6). Banks failing to comply
with targets and sub-targets are required to contribute
shortfall to the Rural Infrastructure Development Fund
at a predetermined interest rate.
Exhibit 6Mechanism of PSL for Bank X with excess lending and Bank Y with shortfall in lending
Mandated Priority Sector
Lending, Bank X
Adjusted Net Bank Credit
(ANBC), Bank X
Adjusted Net Bank Credit
(ANBC), Bank Y
Mandated Priority Sector
Lending, Bank Y
Rural Infrastructure Development Fund
Net Bank Credit
Net Bank Credit
18% Agriculture sub-target
18% Agriculture sub-target
12% Weaker sections sub-target
12% Weaker sections sub-target
7. 5% Microenterprises sub-target
7. 5% Microenterprises sub-target
40%
40%
Investments eligible to be
trated as priority sector
Investments eligible to be
trated as priority sector
Actual Priority
Sector Lending,
Bank X
Actual Priority Sector
Lending, Bank Y
Sold as PSL Certificates
Shortfall in
Priority Sector
Lending, Bank Y
Excess in Priority
Sector Lending,
Bank X www.rmi-india.org /
13Banking on Electric Vehicles in India
Inclusion of Clean Technologies
under PSL
Off-grid solar and off-grid renewable energy solutions
for households were included within PSL guidelines
in 2012.
21
In 2015, renewable energy was included as
a priority sector. This widened the scope of lending
to larger installations and renewable energy-based
public utilities. In 2020, the lending limit to both
commercial and individual borrowers was doubled.
Solar equipment loans were also introduced as
eligible under agriculture lending. Exhibit 7 shows
the current guidelines for clean energy technologies.
Exhibit 7Inclusion of clean energy technologies in priority sector guidelines
Priority sectorLending guidelines Clean energy technologies included
Agriculture
Solar equipment loans for farmers
•
Installation of stand-alone solar agriculture pumps
and for solarising grid-connected agriculture pumps
• Installation of solar power plants on barren/fallow
land or on stilts on agricultural land owned by farmer
Renewable energy
Loans up to INR 30 crore for commercial borrowers and up to INR 10 lakh for households
•
Solar-based power generators, biomass-based
power generators, windmills, micro-hydel plants
• Renewable energy-based public utilities (i.e., street
lighting systems and remote village electrification) www.rmi-india.org /
14Banking on Electric Vehicles in India
Priority Sector Lending Trends
Current lending to priority sectors
In March 2020, India’s scheduled commercial banks
(SCBs) had INR 36 lakh crores ($US493 billion) in
outstanding priority sector credit (see Exhibit 8).
A large portion of this arose from sectors with
mandatory sub-targets (agriculture, microenterprises,
advances to weaker sections).
Different types of SCBs also lend differently across
priority sectors depending on their geographical
reach and risk appetites. For example, in March 2020,
private domestic banks and foreign banks’ largest
share of priority sector lending was to MSMEs. Public
banks lent equally to agriculture and MSMEs. Small
finance banks lent primarily to weaker sections of
society.
22
Historic impact of priority sector lending
PSL is India’s directed credit policy—a regulatory
instrument where governments mandate credit to
sectors whose low returns and long gestation periods
make for less lucrative investments in the short term.
In Japan, for example, directed credit promoted
industrial growth in the 1950s and 1960s. Exhibit 9
shows how PSL has supported sectoral growth in
India.
Exhibit 8Outstanding priority sector credit by SCBs as of March 2020 (in INR thousand crores)
23
Medium Enterprises
Weaker Sections
Export Credit
Renewable Energy
Micro & Small Enterprises
Agriculture& Allied Activities
Educational Loans
Housing
Others
Social Infrastructure
Total
1131
1080
728
460
131
50 17 15 1 1 3612
Note: Data accounts for approximately 90 percent of credit extended by SCBs. www.rmi-india.org /
15Banking on Electric Vehicles in India
Exhibit 10TCO comparison for example segments and use cases
Relevant
priority sector(s)
Impact of
PSL
Case study
Export credit
Higher
supply of
credit
Between 2001 and 2011, priority sector export credit grew around
20 percent year-on-year. In 2012, PSL guidelines were revised,
and export was no longer a priority sector for foreign banks with
more than 20 branches. As a result, credit fell by over 20 percent,
showing the importance of PSL in incentivising banks.
24
Agriculture
More
formalisation
of credit
Prior to the PSL guidelines, 71 percent of agricultural credit came
from informal moneylenders, and 4 percent from commercial
banks. Three decades of PSL later, moneylenders provided 31
percent of credit while commercial banks provided 52 percent.
25
All priority sectors
Lower NPAs Banks are often concerned with NPAs arising from risky priority
sector assets. However, RBI data shows that priority sector NPAs
declined from 51 percent of all NPAs in 2010 to only 27 percent in
2019.
26
Exhibit 9Historic impact of priority sector lending to sectoral growth
The Need for Priority Sector Status
for EVs
Policy reforms are making EVs more economical than
ICE vehicles on a total cost of ownership (TCO) basis
for several segments and use cases (see Exhibit 10).
Despite this improvement in economics, upfront cost
often still presents a barrier, as illustrated in Exhibit 11.
When financing is available, high interest rates,
short tenures, and low loan-to-value ratios present
a significant burden. This is contrary to ICE vehicles
which receive more affordable financing. Low-cost
and increased financing will hence be critical to drive
EV sales in the country.
Segment Use case Case study
Two-Wheelers
Goods delivery Electric 2Ws used for goods delivery are cheaper on a TCO basis than ICE equivalents.
27
With battery-as-a-service business
models, upfront costs are lower as well.
Three-Wheelers
Passenger (auto rickshaw)
Electric autos are close to TCO parity especially in tier 2 and tier 3 cities where shorter distances require smaller batteries.
28
Cars
Passenger (taxis) In the case of Delhi, electric taxis travelling 160 km daily can
achieve payback against diesel taxis in 1.9 years and against petrol taxis in 2.8 years.
29
www.rmi-india.org /
16Banking on Electric Vehicles in India
Exhibit 11Upfront cost and TCO comparisons for example vehicle segments in Karnataka
30
Upfront cost comparisonTCO comparison
6007.0
Thousands INR
INR/km
00.0
100
1.0
2.0
200
3.0
300
4.0
400
5.0
500
6.0
ICE Vehicle
302
6.20
402
1.90
571
2.40
EV Without
Subsidy
EV With Subsidy
3-Wheeler Auto-Rickshaws
Upfront cost comparisonTCO comparison
12.0
Thousands INR
INR/km
00.0
500
2.0
4.0
1000
6.0
1500
4.0
2000
8.0
2500
10.0
Petrol
915
11.60
1204
10.30
Diesel CNG
EV Without
Subsidy
EV With
Subsidy
4-Wheeler Commercial Passenger Vehicles
8.70
2114
6.10
1575
Cost differential
Cost differential
1522
7.80 www.rmi-india.org /
17Banking on Electric Vehicles in India
Priority sector status to EVs can address the lack of
availability of finance. There is a strong case for EVs
as livelihood-generating and supporting assets across
urban as well as rural India, especially for economically
weaker sections of society. Beyond enhancing
accessibility that increases the opportunities for jobs/
accessing markets, the operational cost savings
resulting from use of EVs over ICE vehicles enhance
the income of users to utilise for other avenues
such as healthcare, education, food, or housing.
With greater financing for EVs supplementing the
supply side push from the central government,
localisation will also increase, generating jobs in EV
and related manufacturing. As an increasing number
of aggregators moving towards electric fleets,
the ridehailing and delivery use cases are also expected
to see an increase in employment opportunities.
Simultaneously, electric vehicles present vast
benefits to society, such as:
Improved public
health
Approximately 5 lakh
(500,000) EVs subsidised
by the Delhi EV Policy
can avoid 159 tons of fine
particulate matter (PM2.5)
over the lifetime of the
vehicles.
31
Reduced carbon
dioxide emissions
EVs eligible under the
FAME II scheme can abate
over 74 lakh (7.4 million)
tonnes of CO2 over their
lifetime.
32
Enhanced energy
security
EVs eligible under the
FAME II scheme can result
in oil import savings worth
a cumulative INR 17.2
thousand crores ($US2.3
billion) over their lifetime.
33
The Potential of PSL to Scale
EV Finance
PSL inclusion can be an important near-term
solution to scaling EV finance in the following ways:
1.
Incentivising banks to lend to EVs: Inclusion can
directly incentivise banks to enhance lending as
a part of priority sector targets. Banks that have
not yet ventured into financing EVs may consider
doing so; banks that already finance EVs may be
motivated to create specialised financing options
with lower interest rates and longer loan tenures
(e.g., SBI’s Green Car Loan or Union Bank’s Green
Miles).
34
Overall, a mechanism to encourage a
higher supply of credit can motivate borrowers
opting for informal sources of financing (e.g.,
e-auto rickshaw drivers) to seek bank financing.
2.
Improving access to finance for NBFCs: NBFCs
will be important to expanding financing for EVs due to several factors. First, the vehicle finance market share of NBFCs has been increasing over the past five years, as illustrated in Exhibit 12. In 2016, NBFCs accounted for 43 percent of the formal vehicle financing market. By 2020, NBFCs had surpassed banks to account for 52 percent of market share. Second, NBFCs typically have a higher risk appetite and provide smaller pools of finance, many times in non-metropolitan areas. New fintech-based NBFCs have started enabling greater EV penetration in tier 2 and tier 3 cities. However, NBFCs have been facing a liquidity crunch since 2017 that has been worsened by the effects of COVID-19. This may translate to EV-first
NBFCs struggling to access low-cost finance from
banks. The PSL guidelines allow for co-origination www.rmi-india.org /
18Banking on Electric Vehicles in India
Exhibit 12Share and absolute number (in INR lakh crores) of outstanding vehicle finance advances,
March 2016 to March 2020
35
100%
March
2016
March
2017
March
2018
March
2019
March
2020
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Trend
Note: Data accounts for approximately 90 percent of credit extended by SCBs. NBFC data is provisional.
of loans to the priority sector between banks and NBFCs.
36
Both entities thus share risks and
rewards. Through this “co-lending model,” PSL
inclusion for EVs could also benefit NBFCs, allowing
them to leverage their greater on-ground presence
while benefiting from banks contributing lower-cost funds.
3.
Institutionalising the importance of EVs in India’s
financial industry: In addition to the direct impact
of increasing formal supply of credit, constituting
EVs as a priority sector can help institutionalise the asset class into the industry. As with any new regulation or provision, banks will be encouraged to build up their understanding of EV technology, policy, and business models. This will be important
when considering that limited awareness of the EV industry has led to greater risk perception and
thus underfinancing.
37
Lending may be slower to
pick up due to PSL inclusion, but the system-wide
shift in mindset created could be a powerful catalyst in India’s EV transition.
SCBs 1.51.71.9 2.02.2
NBFCs 1.11.11.7 2.02.4 www.rmi-india.org /
19Banking on Electric Vehicles in India
Design Considerations
for Priority Sector Lending
Guidelines for EVs
Key Considerations
Most priority sectors feature qualifying
criteria for loans to ensure meeting PSL’s goal
of expanding financial access and supporting
employment opportunities. This makes it important
to consider the socioeconomics and scalability of
new amendments. Techno-economic viability of the
segments and banks’ receptiveness to the segments
are also important to consider due to their influence
on lending potential. Hence, to include EVs as a
priority sector, parameters listed in Exhibit 13 must
be carefully deliberated upon.
Exhibit 13Parameters to assess segments for PSL inclusion for EVs
Socio-economic
potential
Which segment-use case
combinations currently
lack the most access to
finance?
Stakeholder
acceptability
Which segment-use case
combinations may be
perceived as least risky
by banks and NBFCs to
finance?
Scalability
With greater access to
finance, which segment-
use case combinations are
likely to be most scalable
from a sales penetration
perspective?
Techno-economic
viability
Which segment-use case
combinations have the
most available products
to perform required duty
cycles?
Livelihood generation
potential
Which segment-use case
combinations have the
potential to support
the greatest number of
livelihoods? www.rmi-india.org /
20Banking on Electric Vehicles in India
Assessment of PSL Inclusion
Methodology and results
A questionnaire survey was carried out to get expert
input on the parameters and objective questions in
Exhibit 13. Respondents to the survey included
stakeholders representing financial institutions, OEMs,
fleet operators, e-commerce, and civil society.
Respondents compared various segment-use case
combinations and ranked options in response. Exhibit
14 builds off the survey results, proposing low,
medium, and high ratings for EV segments and use
cases for each parameter. The ratings should be
considered as indicative only.
Exhibit 14Assessment of EV segments and use cases for inclusion in the priority sector
lending guidelines
38
E-2WPrivateDelivery
Socio-economic potential MediumHigh
Livelihood generation potentialMediumHigh
ScalabilityHighHigh
Techno-economic viability HighHigh
Stakeholder acceptability HighHigh
Remarks
E-2Ws have high sales forecasts, are
the most economically viable, and have
high model availability. When privately
owned, they present low financing risk.
Although generating income for the
buyer, e-2Ws used for delivery present
higher financing risk, given reliability
concerns expressed by operators.
Availability of finance can influence
purchase decisions.
E-3WE-rickshaws and
e-carts
Auto-rickshaws
(passenger)
Carriers
(delivery)
Socio-economic potential HighMediumHigh
Livelihood generation potentialHighHighHigh
ScalabilityHighMediumHigh
Techno-economic viability HighMediumMedium
Stakeholder acceptability MediumMediumHigh
Remarks
E-3W ownership supports job creation but presents high asset and business model risk,
which banks may be less receptive to financing. 3W financing currently is dominated
by moneylenders; hence, PSL inclusion would be critical to scaling the sector. While
EESL plans to lease e-3Ws in the near term, it will be important to build the financing
capacity of the market simultaneously. www.rmi-india.org /
21Banking on Electric Vehicles in India
E-4WPrivate Ridehailing Commuter
services
Carriers
(delivery)
Socio-economic
potential
LowLowLowMedium
Livelihood
generation potential
LowMediumMediumMedium
Scalability LowLowLowMedium
Techno-economic
viability
LowLowLowLow
Stakeholder
acceptability
HighLowLowMedium
Remarks
Private electric cars
are the lowest-risk
EV segment, thus
highly acceptable by
banks. PSL inclusion
would likely scale the
segment due to low
credit-risk profile of
buyers but hold back
financing of other
segments. Model
availability is low;
TCO parity exists, but
the payback period
may be long.
Ridehailing presents
higher risk than the
private use case,
although it supports
job creation. The
techno-economic
viability depends
on extremely high
utilisation of 200-
plus km/day.
Commuter services
are a prominent
shared mobility
use case; however,
the borrowers are
typically companies,
with financing
dependent on their
balance sheets.
Model availability is
low, especially given
the high utilisation
required.
E-BusesPublicPrivate
Socio-economic potential LowLow
Livelihood generation potentialLowLow
ScalabilityLowLow
Techno-economic viability LowLow
Stakeholder acceptability LowLow
Remarks
Borrowers are state transport undertakings or private operators. Loan ticket sizes are high, in addition to high financing risk. www.rmi-india.org /
22Banking on Electric Vehicles in India
Lending limits
Another possible criterion that could be considered
is lending limits for individuals and fleets. Lending
limits are ticket size caps above which loans do not
qualify as PSL. They ensure that large institutions
and lower-risk borrowers do not disproportionately
benefit from priority sector inclusion. They are important
when higher cost assets are being financed. For
example, beyond INR 30 crores ($US4 million), bank
financing for commercial solar installations does not
qualify under PSL. Lending limits would be relevant for
EV segments with a higher variation of cost to
concentrate priority sector lending towards mass-
market adoption instead of small-scale adoption of
luxury models.
The FAME II scheme already accounts for a similar
maximum asset cost cap on eligible vehicles.
39
If
exploring the inclusion of vehicles not covered by
FAME II (e.g., private e-cars), the RBI could opt for
a lending limit here. This would help enhance the
scalability and socioeconomic potential of the
inclusion.
Recommendations
There are a number of ways to combine the segments assessed above into portfolios of segments and use cases for PSL inclusion. Each combination has its benefits and trade-offs. Three options that we are proposing for consideration are:
All light vehicles:
e-2Ws, e-3Ws, e-4Ws
Market-ready
segments:
e-2Ws, e-3Ws, commercial
e-4Ws
FAME II segments:
e-2Ws, e-3Ws, commercial
e-cars, public e-buses
The RBI may also consider including all segments of EVs under the PSL guidelines. However, lack of specificity may result in low-risk segments such as private e-cars also receiving priority sector loans. At this stage, the high ticket size and financing risk of e-buses may also make route 2 above less optimal. Focusing on the market-ready segments combination
may thus offer the ideal starting point.
Other Key Considerations
It is important to note that PSL offers a largely voluntary pathway for banks. Increased lending is not guaranteed unless a sub-target is also implemented simultaneously.
Currently, bank credit to NBFCs for on-lending to agriculture and micro and small enterprises can be classified as priority sector lending if it meets certain pre-determined criteria. This provision will be valid until March 2022. If it were to continue past this date, EVs could also be included. This would allow the inclusion of EVs in the PSL guidelines to also extend to NBFCs, which are important lenders to vehicle finance. www.rmi-india.org /
23Banking on Electric Vehicles in India
Next Steps and Enablers
Initial Next Steps to
Operationalise the Concept
Ultimately, getting from PSL recommendations
to reform will require engagement of various
stakeholders. The importance of a unified voice on
PSL inclusion for EVs is exemplified by the example
of renewable energy, in which the Ministry of New and
Renewable Energy worked closely with other
government ministries and commercial banks to
advocate for PSL inclusion.
40
This administrative will
and consensus building was essential to recognising
renewable energy as a national priority and thus a
priority sector for lending.
To include EVs in priority sector lending, a relevant
government agency will need to take lead and liaise
with the RBI. NITI Aayog is doing this and has submitted
a proposal to the RBI.
41
There is also a need to
convene other ministries to discuss and align on the
concept and the design of preliminary guidelines.
Other stakeholders—such as state governments,
FICCI, the Indian Banks Association, the Society of
Manufacturers of Electric Vehicles, Society of Indian
Automobile Manufacturers, e-commerce/logistics
companies, and civil-society organisations—will be
important to engage in the design process.
Once the RBI recognises the need for including
EVs in PSL guidelines, it can constitute an internal
working group to finalise the guidelines. It may
consider inviting closed or public comments on
proposed qualifying criteria via a consultative paper.
Throughout this process, the lead government
agency and other advocates will be responsible for
driving further consensus for PSL inclusion among
financial institutions and industry.
Enablers to Maximising the Impact
of Inclusion
Including EVs as a priority sector is a crucial near-term
solution to scaling financing. However, to maximise the
impact of the reform, supportive mechanisms will
also need to be enacted simultaneously and in the
medium-term. A few interventions that can work
directly with PSL to rapidly increase lending are
outlined below.
1.
Sub-target for clean energy solutions: Within
the PSL guidelines, a sub-target encompassing renewable energy and EVs would incentivise lending in these sectors by creating a clear target
and penalty mechanism for banks that fail to expand their lending to these sectors. This would serve to further institutionalise the importance of finance to the energy transition, and consequently, the importance of the energy transition to finance in India. Even at as low as 1–2 percent of ANBC, the finance mobilised towards clean energy solutions would be significant.
At that scale, banks would be able to understand EVs more intuitively and embark on a faster curve
to lower NPAs across the industry.
2.
EVs included as an infrastructure sub-sector:
The Harmonised Master List of Infrastructure Subsectors, compiled by the Department of Economic Affairs, Ministry of Finance, provides financing and taxation benefits to predetermined subsectors in order to lower cost of credit and improve flexibility for investors.
42
For example,
subsectors with this ‘infrastructure status’ benefit from a higher limit on external commercial
borrowings (allowing for cheaper funding in foreign currencies). They are also eligible for long-term loans and longer amortisation periods and can receive financing assistance from specialised agencies like the India Infrastructure Finance Company Limited.
43
Inclusion of electric mobility as an infrastructure subsector would create an enabling environment for large investments in the sector such as EV and
battery manufacturing, charging infrastructure deployment, and electric bus rollout. With greater
availability of financing upstream, the capital cost
associated with EV ownership can be lowered, www.rmi-india.org /
24Banking on Electric Vehicles in India
improving the economic viability and affordability
of EVs.
3. EV loans as a reporting category: Currently, no
data is available regarding number of EV loans
advanced, outstanding advances, or NPAs. This
information asymmetry in the industry is a
barrier to understanding financing patterns and
thus improving the flow of finance. To solve this
problem, RBI can incorporate EV loans as a unique
reporting category under personal loans in the
Basic Statistical Returns (BSR). Additional modes
of data collection where EVs can be included as a
sector include the Sector-wise and Industry-wise
Bank Credit (SIBC) returns, and the Supervisory
Returns for NBFCs. This data can then be
aggregated and shared via RBI’s Database on the
Indian Economy.
In the long term, constituting EVs as a separate
reporting category may also create a market for
specialised EV loan products with lower interest
rates and longer tenures. A supportive taxonomy
on sustainable finance, already being worked on
by the Ministry of Finance, can further support
mainstreaming of EVs in the financial industry.
44
4.
Loan guarantee programs: Priority sector lending
helps improve supply of credit but does not directly address challenges such as interest rates
and equated monthly instalments. In the short term, interest rate subventions can play this part,
as the Delhi EV Policy has demonstrated through its proposed subvention scheme. In the medium to long term, there must continue to be a focus on solutions that reduce inherent risks. For example, loan guarantees covering specific risks have the potential to increase liquidity in the EV sector alongside PSL. Multilateral financiers or national development banks can offer such guarantees to banks and NBFCs in India with predetermined lending terms.
45
The NITI Aayog
and World Bank first-loss risk-sharing facility is a significant move in this direction. The risk cover
will provide banks with greater confidence in lending and in turn improve offtake of priority sector provisions for EVs.
Exhibit 15Wider interventions to unlock EV finance
46
Stakeholders beyond the financial industry can also implement complementary
initiatives to PSL and enable greater financing for EVs:
•
OEMs: Product guarantees from OEMs can assure financiers of the product quality and performance
of EV models. Warranties for OEMs can cover the repairs and replacement of parts, ensuring buyers
are not presented with additional costs. Buyback programmes where OEMs guarantee repossession
and resale can create clarity around resale value. Battery OEMs can similarly lead in the creation of
battery repurposing and recycling programs.
•
Aggregators and e-commerce providers: Fleet aggregators, delivery companies, and e-commerce
providers can provide credit guarantees and utilisation guarantees to driver-partners. This can enhance the confidence of financiers in providing loans for this use case. More broadly, electrification targets through initiatives such as EV100 can create ambitious market signals for policy, manufacturing, as well as financing.
•
State governments: State EV policies can galvanise OEMs, aggregators, and e-commerce through
the establishment of state-level targets. Interest rate subvention schemes can create an early learning curve for financiers, especially on high-risk segments such as e-3Ws. Incentives for OEMs to assure buybacks and warranties can also be offered. www.rmi-india.org /
25Banking on Electric Vehicles in India
Conclusion: Helping India
Bank on EVs
Incentives, investment, and innovation are
driving India’s rapidly increasing EV
adoption. Finance will be critical to achieving
scale. However, the real and perceived risks
of a relatively new asset class have meant that
financial institutions like banks and NBFCs have
not yet built up their confidence or capabilities of
financing the sector.
India’s EV finance market could reach INR 3.7 lakh
crores ($US50 billion) in advances by 2030.
47
Priority
sector lending can be a crucial pathway to helping
realise this potential. If designed well, it can incentivise
banks to finance EVs and improve finance for NBFCs,
while institutionalising the importance of the EV
sector within the financial industry. Considering
socioeconomic potential, livelihood generation
potential scalability, technoeconomic viability, and
stakeholder acceptability, market-ready electric
2Ws, 3Ws, and commercial 4Ws currently offer the
ideal starting point for PSL inclusion.
To enable this reform, several actors will need to
align on a vision and also consider supplementary
solutions. Implementing the solutions outlined in
the report can help maximise the impact of PSL
inclusion for EVs. Most importantly, these solutions
are mutually beneficial for all:
EV buyers
—————————————————————————————————
Greater flow of and lower cost of
financing will yield higher sales
that can reap economic, social,
and public health benefits.
Government of India
————————————————————————————————————————————————————————————————————————————
Creating an enabling environment for EV adoption will be key to India’s
development goals. Focusing on EV finance will also support India’s ambition
to decarbonise its vehicle stock, aligning with its target of net-zero emissions
by 2070.
Banks and NBFCs
—————————————————————————————————
Proactively financing EVs will
showcase financial institutions’ ESG
credentials, unlocking better priced
better-priced debt financing going
forward.
Reserve Bank of India
—————————————————————————————————
Reforming PSL to promote
green lending will reinforce RBI’s
commitments as a member of
the Network for Greening the
Financial System.
48
EV industry (OEMs, fleet
owners/aggregators)
—————————————————————————————————
PSL inclusion and consequent
boost to EV finance will result in
improved EV demand and sales. www.rmi-india.org /
26Banking on Electric Vehicles in India
1. M
A Toolkit of Solutions to Mitigate
Risks and Address Market Barriers,
NITI Aayog and Rocky Mountain Institute,
January 2021, https://rmi-india.org/insight/
mobilising-finance-for-evs-in-india/.
2. Ministry of Heavy Industries and Public
Enterprises (Department of Heavy Industry), S.O.
2258(E), Gazette of India, 11 June 2021.
3. “Government has approved Production Linked
Incentive (PLI) Scheme for Auto Industry and Drone Industry to enhance India’s manufacturing capabilities,” Press Information Bureau, September 15, 2021. https://pib.gov.in/PressReleasePage.aspx?PRID=1755062.
4.
RMI and RMI India analysis.
5. HT Correspondent, “Karnataka tweaks
Electric Vehicle policy to attract investment,” Hindustan Times, May 28, 2021, https://www.hindustantimes.com/cities/others/karnataka-tweaks-ev-policy-to-attract-investment-101622142001614.html.
6.
News reports.
7. Shruti Mishra, ETAuto, “Putting EV at forefront,
Indian auto inc proposes USD 13 bn investment in 2021,” The Economic Times, January 08, 2022, https://auto.economictimes.indiatimes.com/news/auto-technology/bringing-ev-tech-to-the-fore-indian-auto-sector-invests-usd-13b-in-2021/88514223.
8.
Shruti Mishra, ETAuto, “EV funding hits all-time
high in 2021 as investors bet big on support systems,” The Economic Times, January 04, 2022, https://auto.economictimes.indiatimes.com/news/industry/ev-funding-scales-new-peak-in-2021-as-investors-bet-big-on-support-systems/88674432.
9.
ANI PR, “Axis Bank and GuarantCo, through
PIDG, announce guarantee platform with a programme size of USD 300 million to accelerate transition to electric vehicle eco-system in India,” The Print, November 17, 2021, https://theprint.in/ani-press-releases/axis-bank-and-guarantco-through-pidg-announce-guarantee-platform-with-a-programme-size-of-usd-300-million-to-accelerate-transition-to-electric-ve-
hicle-eco-system-in-india/767296/.
10.
Shruti Mishra, ETAuto, “Putting EV at forefront,
Indian auto inc proposes USD 13 bn investment in 2021,” The Economic Times, January 08, 2022, https://auto.economictimes.indiatimes.com/news/auto-technology/bringing-ev-tech-to-the-fore-indian-auto-sector-invests-usd-13b-in-2021/88514223.
11.
Podishetti Akash, “Ola Electric raises $200 mn
funding, valuation touches $3 bn,” Mint, October 01, 2021, https://www.livemint.com/companies/news/softbank-leads-ola-electric-s-200-mn-funding-round-valued-at-3-bn-11633005908147.html.
12.
Vahan Sewa Dashboard, Ministry of Road
Transport & Highways, Government of India, https://vahan.parivahan.gov.in/vahan4dashboard.
13.
Mobilising Finance for EVs in India: A Toolkit of
Solutions to Mitigate Risks and Address Market Barriers, NITI Aayog and Rocky Mountain Institute, January 2021, https://rmi-india.org/insight/mobilising-finance-for-evs-in-india/.
14.
Ibid.
15. Ibid.
16. Lijee Philip and Saloni Shukla, ET Auto, “Niti
Aayog, World Bank ready electric vehicles financing push,” The Economic Times, November 01, 2021, https://economictimes.indiatimes.
Endnotes www.rmi-india.org /
27Banking on Electric Vehicles in India
com/industry/renewables/niti-aayog-world-
bank-ready-electric-vehicles-financing-push/
articleshow/87448054.cms.
17.
“FICCI Urges Govt to Extend FAME-II Scheme
Till 2025 to Boost Electric Vehicle Demand,” Press Trust of India, News 18, July 04, 2020, https://www.news18.com/news/auto/ficci-urges- govt-to-extend-fame-iischeme-till-2025-to- boost-electric-vehicle-demand-2698069.html;
and “NITI Aayog Reviews EV-related Policies, Recommends Bringing Financing Under Priority Sector Lending,” Moneycontrol, August 24, 2020.
18.
Reserve Bank Staff College, Functions and
Working of RBI, Reserve Bank of India, https://rbidocs.rbi.org.in/rdocs/ Publications/PDFs/RWF15012018_ FCD40172EE58946BAA647A765DC942BD5. PDF.
19.
ANBC refers to the outstanding credit of the
bank after accounting for bills rediscounted by the RBI and bonds in non-statutory liquidity ratio category (or investments eligible to be treated as priority sectors). Targets may also be computed on the bases of credit equivalent of off-balance sheet exposures (CEOBE) if it is higher.
20.
Master Directions – Priority Sector Lending
(PSL) – Targets and Classification, Reserve Bank of India, September 2020, https://www.rbi.org. in/Scripts/BS_ViewMasDirections.aspx?id=11959;
and Database on Indian Economy, Reserve Bank of India, https://dbie.rbi.org.in .
21.
Revised Guidelines on Priority Sector Lending –
Targets and Classification. July 2012, Reserve Bank of India, https://www.rbi.org.in/scripts/ BS_PressReleaseDisplay.aspx?prid=26882.
22.
Database on Indian Economy, Reserve Bank of
India, https://dbie.rbi.org.in.
23. Ibid.
24. Re-Prioritizing Priority Sector Lending in India:
Impact of Priority Sector Lending on India’s Commercial Banks, Nathan Associates, Inc., December 2013, https://www.nathaninc.com/
wp-content/uploads/2017/10/Priority_Sector_ Lending_India.pdf.
25.
Ibid.
26. Nilofar Bano and Manish Sharma, Priority sector
lending in India: Revisiting the issue under new guidelines of RBI, Int J Appl Res 2020;6(12):394- 398, DOI: 10.22271/allresearch.2020.v6.i12f.8136.
27.
“Deliver Electric Delhi: Pilot on Electrification of
Final-mile Delivery Vehicles in Delhi,” Dialogue and Development Commission of Delhi and Rocky Mountain Institute, 2020, https://rmi.org/ insight/deliverelectric-delhi/.
28.
“India Business Guide to EV Adoption,” World
Business Council for Sustainable Development, 2019. https://www.wbcsd.org/Programs/ Cities-and-Mobility/Transforming-Mobility/ Transforming-Urban-Mobility/Emobility/ Resources/India-Business-Guide-to-EV-Adoption.
29.
Mandar Patil and Akshima Ghate, “The Role
of Incentives in Reducing the Total Cost of Ownership of Electric Vehicles in Delhi, India,” Oxford Energy, 2020, https://www.oxfordenergy. org/wpcms/wp-content/uploads/2020/07/ OEF122.pdf.
30.
RMI and RMI India analysis.
31. Accelerating Delhi’s Mobility Transition: Insights
from the Delhi Urban Mobility Lab, Dialogue and Development Commission of Delhi and Rocky Mountain Institute, https://rmi.org/insight/ urban-mobility-lab-delhi/.
32.
India’s Electric Mobility Transformation:
Progress to date and future opportunities, NITI Aayog and Rocky Mountain Institute (RMI), 2019. https://rmi.org/insight/indias-electric-mobility- transformation/.
33.
Ibid.
34. State Bank of India, “Green Car Loan: For
Electric Cars,” https://www.sbi.co.in/web/ personal-banking/Loans/auto-loans/green-car- loan; and Union Bank of India, “Union Green Miles,” https://www.unionbankofindia.co.in/ www.rmi-india.org /
28Banking on Electric Vehicles in India
english/union-green-miles.aspx.
35. Database on Indian Economy, Reserve Bank of
India, https://dbie.rbi.org.in.
36. Co-Lending by Banks and NBFCs to Priority
Sector, November 2020, Reserve Bank of India,
https://www.rbi.org.in/Scripts/NotificationUser.
aspx?Id=11991&Mode=0.
37.
Soman, Abhinav, Karthik Ganesan, and
Harsimran Kaur, India’s Electric Vehicle Transition: Impact on Auto Industry and Building the EV Ecosystem, 2019, New Delhi: Council on Energy, Environment and Water, https://www. ceew.in/sites/default/files/CEEW-IndiaElectricVe hicleTransitionReportPDF26Nov19.pdf.
38.
Mobilising Finance for EVs in India: A Toolkit of
Solutions to Mitigate Risks and Address Market Barriers, NITI Aayog and Rocky Mountain Institute, January 2021, https://rmi-india.org/ insight/mobilising-finance-for-evs-in-india/.
39.
“Models Under FAME,” Ministry of Heavy
Industries, Government of India, https://fame2. heavyindustry.gov.in/ModelUnderFame.aspx.
40.
“Priority sector lending tag likely for RE,”
Projects Monitor, February 02, 2015, https:// www.projectsmonitor.com/daily-wire/priority- sector-lending-tag-likely-for-re/.
41.
Lijee Philip and Saloni Shukla, ET Auto, “RBI
weighs priority sector loans for electric vehicles,” December 06, 2021, The Economic Times, https://economictimes.indiatimes. com/industry/renewables/rbi-weighs-
priority-sector-loans-for-electric-vehicles/ articleshow/88112893.cms.
42.
Ministry of Finance (Department of Economic
Affairs), F. No. 13/1/2017-INF, Gazette of India, 24 August 2020.
43.
ET Bureau, “Govt clears harmonised list;
identifies 5 main sectors & 29 subsectors that should get infrastructure status,” March 02, 2012, The Economic Times, https:// economictimes.indiatimes.com/news/economy/ infrastructure/govt-clears-harmonised-list- identifies-5-main-sectors-29-subsectors- that-should-get-infrastructure-status/ articleshow/12104498.cms
44.
“DEA holds Sustainable Finance Collaborative
consultation with UNDP,” August 28, 2020, Press Information Bureau, https://pib.gov.in/ PressReleaseIframePage.aspx?PRID=1649406.
45.
Mobilising Finance for EVs in India: A Toolkit of
Solutions to Mitigate Risks and Address Market Barriers, NITI Aayog and Rocky Mountain Institute, January 2021, https://rmi-india.org/ insight/mobilising-finance-for-evs-in-india/.
46.
Ibid.
47. Ibid.
48. “RBI joins Network for Greening the Financial
System,” Reserve Bank of India, April 29, 2021, https://www.rbi.org.in/Scripts/BS_ PressReleaseDisplay.aspx?prid=51496. Banking on Electric Vehicles in India: A Blueprint for Inclusion of EVs in Priority Sector Lending
Guidelines, RMI India 2022, http://www.rmi-india.org/url here.
All images used are from iStock.com and Shutterstock.com unless otherwise noted.
RMI India
Second Floor, Claridges Hotel Commercial Wing
12 APJ Abdul Kalam Road New Delhi 110 011, India
www.rmi-india.org
© January 2022 RMI India. All rights
reserved. Rocky Mountain Institute® and
RMI® are registered trademarks.
Vehicles in India
Report /
Jan 2022
A Blueprint for Inclusion of EVs in Priority
Sector Lending Guidelines www.rmi-india.org /
2Banking on Electric Vehicles in India
Authors & Acknowledgments
Authors
Randheer Singh, NITI Aayog
Akshima Ghate, RMI India
Isha Kulkarni, RMI India
Clay Stranger, RMI
Ryan Laemel, RMI
Contacts
For more information, contact indiainfo@rmi.org
Acknowledgments
The authors are grateful for the time and insights offered by industry experts that
participated in the survey that formed the basis of the recommendations offered in this
report. The authors also thank the following individuals for offering their insights and
perspectives on this work:
RMI Samhita Shiledar
RMI India Chetna Nagpal, Dimpy Suneja, Raghav Anand
Axis Bank Sumit Bali
cKers Finance Nishant Goel, Jayant Prasad
Flipkart Dharashree Panda, Mahesh Pratap Singh
Micelio Vidya Shankar M
RevFin Sameer Aggarwal
Independent Contributor Ankit Jain
Suggested Citation
NITI Aayog, RMI, and RMI India, Banking on Electric Vehicles in India: A Blueprint for
Inclusion of EVs in Priority Sector Lending Guidelines, January 2022. www.rmi.org/
insight/banking-on-electric-vehicles-in-india.
Available at RMI India:
https://rmi-india.org/insight/banking-on-electric-vehicles-in-india.
Available at RMI:
https://rmi.org/insight/banking-on-electric-vehicles-in-india.
All images used are from iStock.com/Shutterstock.com unless otherwise noted. www.rmi-india.org /
3Banking on Electric Vehicles in India
About NITI Aayog
The National Institution for Transforming India (NITI Aayog) was formed via a resolution
of the Union Cabinet on 1 January 2015. NITI Aayog is the premier policy ‘Think Tank’ of
the Government of India, providing both directional and policy inputs. While designing
strategic and long-term policies and programmes for the Government of India, NITI
Aayog also provides relevant technical advice to the Centre and States. The Government
of India, in keeping with its reform agenda, constituted the NITI Aayog to replace the
Planning Commission instituted in 1950. This was done in order to better serve the
needs and aspirations of the people of India. An important evolutionary change from the
past, NITI Aayog acts as the quintessential platform of the Government of India to bring
States to act together in national interest, and thereby fosters Cooperative Federalism.
About RMI
RMI is an independent nonprofit founded in 1982 that transforms global energy systems
through market-driven solutions to align with a 1.5°C future and secure a clean,
prosperous, zero-carbon future for all. We work in the world’s most critical geographies
and engage businesses, policymakers, communities, and NGOs to identify and scale
energy system interventions that will cut greenhouse gas emissions at least 50 percent
by 2030. RMI has offices in Basalt and Boulder, Colorado; New York City; Oakland,
California; Washington, D.C.; and Beijing.
About RMI India
RMI India is an independent think-and-do tank. RMI India takes inspiration from and collaborates with RMI, a 40-year-old non-governmental organisation. RMI India’s mission is to accelerate India’s transition to a clean, prosperous, and inclusive energy future.
About Us www.rmi-india.org /
4Banking on Electric Vehicles in India
Table of Contents
Introduction: India’s EV Transition and
the Role of Finance
6
Conclusion: Helping India Bank on EVs25
Design Considerations for Priority Sector Lending
Guidelines for EVs
19
Overview of Priority Sector Lending
and the Opportunity for EVs
11
Endnotes26
Highlights5
Next Steps and Enablers23 www.rmi-india.org /
5Banking on Electric Vehicles in India
Highlights
• Cumulative investment in India’s
e
lectric vehicle (EV) transition could
be as large as INR 19.7 lakh crore
($US266 billion) between 2020 and
2030, highlighting the need for higher
liquidity and lower cost of capital for EV
assets and infrastructure. The recently
announced first-loss risk-sharing instrument
led by NITI Aayog and the World Bank has the
potential to meet this gap.
•
Including EVs in the Reserve Bank of India’s
priority sector lending (PSL) guidelines can
complement the $US300 million facility and
encourage the financial sector to mobilise
necessary capital.
•
Priority sector lending mandates certain banks to
direct a specified percentage of bank credit to priority sectors. Inclusion for retail lending to EVs
has the potential to increase investor confidence by providing a market signal of ongoing government
commitment to the sector. It can also ensure
a swift and equitable transition by providing a
mandate for financial institutions to direct credit to segments and use cases where credit deficiency
persists despite compelling economics.
•
Electric two- and three-wheelers, as well as four-
wheelers in commercial use cases, represent favourable segments towards inclusion of EVs in priority sector lending due to greater need for formal credit, higher potential for job creation and scale in urban and rural areas, relatively high sales forecasts, greater model availability, and smaller gap to parity in total cost of ownership.
•
To operationalise the concept of including EVs
in priority sector lending, central government policymakers can liaise with the Reserve Bank of India to design and issue the requisite guidelines. Financial institutions and the EV ecosystem can contribute by outlining how PSL inclusion can influence their growth and investment plans. This report can serve as the basis for this discussion.
•
While this intervention is promising, it will
not solve the financing challenges alone and a variety of persistent risks to EV finance remain. Additional policy and market measures to address those challenges include state-level fiscal incentives, open data on vehicle performance, industry-led buyback programmes, and loan guarantee facilities. www.rmi-india.org /
6Banking on Electric Vehicles in India
Opportunity: Recent
investments in India’s EV
ecosystem
India’s commitment to the EV30@30 initiative—to
reach a 30 percent sales share for EVs by 2030—
presents a cumulative investment opportunity of as
large as INR 19.7 lakh crore ($US266 billion).
1
There
has been a recent increase in public budgetary
allocations and corporate investment in EVs in order
to achieve this (see Exhibit 1). Central and state
governments have approved fiscal incentives for
EVs, charging infrastructure, and manufacturing
that are helping achieve parity in total cost of
ownership with internal combustion engine (ICE)
vehicles for several segments and use cases. Original
equipment manufacturers (OEMs) and component
manufacturers are investing in indigenous
manufacturing and supply chains. EV startups are
attracting significant venture funding due to their
product and business model innovation, capturing as
well as creating the market opportunity presented
by EVs.
Introduction: India’s EV
Transition and the Role of
Finance
Stakeholder(s) Initiative(s)
Department of Heavy Industry (DHI), Government of India
Revision of Faster Adoption and Manufacturing of Electric Vehicles Phase II (FAME II) demand incentives for electric 2-wheelers (e-2W) from INR 10,000 per kWh to INR 15,000 per kWh. Incentive cap increased from 20 percent to 40 percent of the capital cost of the e-2W. Energy Efficiency Services Limited (EESL) will be responsible for aggregating and leasing 3 lakh electric 3-wheelers (e-3W) as well as electric buses (e-buses) available under FAME II.
2
Government of India Production-Linked Incentive (PLI) scheme worth INR 18,100 crores (US$2.4 billion) approved for investments in advanced chemistry cell (ACC) battery manufacturing and worth INR 26,058 crore (US$3.5 billion) approved for automotive manufacturing focusing on EVs and hydrogen fuel cell vehicles.
3
State governments State EV policies of Assam, Goa, Gujarat, Himachal Pradesh, Meghalaya, Odisha, Rajasthan, and West Bengal notified. Maharashtra EV policy revised to offer additional demand, supply, and charging infrastructure.
4
Karnataka EV policy
undergoing a set of revisions, including the announcement of capital subsidies for manufacturing and initial proposals for demand incentives and other concessions for EVs.
5
Exhibit 1Key capital commitment and deployment for electric mobility in India between January and December 2021. www.rmi-india.org /
7Banking on Electric Vehicles in India
E-commerce,
fleet operators/
aggregators
Companies including Amazon, Capgemini, Dalmia Cement, JSW Cement, and
Zomato made new commitments to 100 percent electrification of their fleets in
India between 2030 and 2040.
6
OEMs, EV component
and battery
manufacturers, EVSE
companies
Companies including Ashok Leyland, Mahindra & Mahindra, Omega Seiki Mobility,
Simple Energy, and Tata Motors made announcements to invest a total of over
INR 48,000 crores (US$6.5 billion) in electric vehicles, components, and battery
manufacturing; electric vehicle supply equipment (EVSE); research and
development (R&D); and deployment in 2021.
7
EV startups Startups including Hero Electric, Magenta, and Ola Electric raised venture
funding of nearly INR 3,307 crores (US$446 million) for EV/component/battery
manufacturing and EVSE in 2021.
8
Financial institutionsAxis Bank and the United Kingdom’s Private Infrastructure Development Group
(PIDG) announced a capital financing guarantee of INR 1,500 crores (US$200
million) towards manufacturing, distribution, and servicing of EVs, batteries,
components, and charging infrastructure.
9
Exhibit 2Key investment announcements in India (in INR thousand crores) totalling INR 48,000
crores (US$6.5 billion), January–December 2021
47%
32%
6%
5%
5%
5%
Tata Motors
22,500
Mahindra3,000
Ola Electric2,350
Simple Energy2,500
Omega Seiki2,230
Other Investments15,635 www.rmi-india.org /
8Banking on Electric Vehicles in India
Challenge: Low Liquidity for EVs in
Today’s Market
The public and private sector investments and
initiatives in the EV ecosystem are accelerating capital
deployment towards India’s electric mobility transition.
Government of India flagship initiatives FAME II, PLI
for ACC batteries and automotive manufacturing alone
total INR 0.6 lakh crores ($US7.5 billion). Ola Electric
alone is currently worth INR 0.2 lakh crores ($US3
billion).
11
However, in terms of sales, EVs represent a
little over 1 percent of the market.
12
At the same time, retail lending to support consumers
and institutions in financing EVs has been slow to pick
up. Financial institutions (FIs) have not yet increased
lending to the level that would be required—an
estimated INR 40,000 crores ($US5 billion) by 2025
and INR 3.7 lakh crores ($US50 billion) by 2030.
13
Given the nascency of EV technology and adoption,
FIs such as banks and non-banking finance companies
(NBFCs) are not lending to EVs due to associated
asset and business model risks (see Exhibit 3). These
risks are both real (e.g., uncertainty of resale value)
and perceived (e.g., product quality). As a result, if
financing is available, EV buyers are unable to obtain
terms (i.e., interest rates and tenures) that are
comparable to ICE vehicles.
Exhibit 3Challenges and risks encountered in financing EVs
14
Underlying Causes
BUSINESS MODEL RISK
Operations and
Maintenance Risk
Customer Risk
Utilisation Risk
ASSET RISK
Technology Risk
Policy Risk
Manufacturer Risk
Resale Risk
Low
confidence of
financing
Key Challenges
High Interest Rates
Interest rates of 20% or more
(2x of petrol diesel vehicles)
Low Loan-To-Value Ratio
Down payment between 25%
and 50% for EVs, including capital-
intensive e-buses
Limited Financing Options
Few dedicated EV loan products
outside of e-rickshaw loans and SBI’s
Green Car Scheme
Short Loan Tenures
Tenures shorter than ICE vehicle
loans by several months, increasing the
equated monthly installment (EMI) www.rmi-india.org /
9Banking on Electric Vehicles in India
Governments across the world are recognising this
challenge and are introducing supportive measures
to facilitate easier financing of EVs. Exhibit 4 shows
a few prominent examples.
In India, NITI Aayog and the World Bank are
setting up a $US300 million first-loss risk-sharing
instrument. The instrument is intended to act as a
hedging and guaranteeing mechanism that banks
and NBFCs can access in the event of payment
delays on EV loans. The programme is expected to
bring down the financing costs for EVs by 10–12 percent.
Up to $US1.5 billion could be mobilised as a result of
the instrument.
16
This availability of credit will greatly enhance liquidity
for EVs. Simultaneously, there is a need for
complementary regulatory measures that support
the risk-sharing instrument and provide an incentive
for FIs to finance EVs.
Exhibit 4International examples of government support to financing EVs
15
Country Government Entity Intervention Description
Australia Clean Energy Finance Corporation
Risk-sharing mechanism
Australia’s public green bank partners with private banks to share risks and set up green vehicle loan schemes through an Asset Finance program.
United Kingdom Transport Scotland Interest rate-free loans
The Scottish Government agency offers interest-free loans for cars, motorcycles, and scooters with longer repayment periods.
United States of America
California State State EV authority
California State Bill 633 established an authority to lower EV capital with incentives, rebates, tax credits, loan guarantees, seed funds, and matching grants. www.rmi-india.org /
10Banking on Electric Vehicles in India
The Potential of Priority Sector
Lending to Catalyse EV Finance
Priority sector lending (PSL) has the potential to
institutionalise the role of finance in India’s EV
transition. The PSL guidelines by the Reserve Bank
of India (RBI) mandate that scheduled commercial
banks allocate specific levels of bank credit towards
priority sectors (see the next section for more detail).
In 2019, public-sector banks led by State Bank of
India (SBI) requested priority sector recognition for
retail lending to EVs. The Federation of Indian
Chambers of Commerce and Industry (FICCI) and
NITI Aayog have advocated for the same as well.
17
Including EVs as a priority sector has potential to:
Purpose of This Report
This report, Banking on Electric Vehicles in India, aims to:
•
Outline the structure, mechanics, and history of PSL
• Propose considerations to inform the design of guidelines for including EVs in the PSL guidelines
• Summarise actions needed to implement and ensure the success of EVs as a priority sector
Increase investor
confidence by providing an
additional market signal
that complements central
and state governments’
existing planning and
policies.
Ensure a swift and
equitable transition by
guiding FIs to increase
credit penetration in
credit-deficient segments
and use cases.
Accelerate EV adoption
by instituting regulatory
measures that help EVs
access more finance. www.rmi-india.org /
11Banking on Electric Vehicles in India
Overview of Priority Sector
Lending and the Opportunity
for EVs
What is Priority Sector
Lending?
The Reserve Bank of India (RBI) introduced the
priority sector lending (PSL) guidelines in 1972
to expand financial access to vulnerable sections of
society by enhancing credit for “priority” sectors with
high employment and poverty alleviation potential
but low bankability.
18
The guidelines mandate that banks subjected to the
regulation direct a specified target percentage of
adjusted net bank credit (ANBC)
19
to priority sectors
(see Exhibit 5). Current priority sectors that can
receive this credit include agriculture; micro, medium,
and small enterprises (MSMEs); housing; renewable
energy; education; social infrastructure; export credit;
self-help groups and startups; and weaker sections
of society. Of these, agriculture, microenterprises,
and weaker sections have sub-targets that all banks
are required to achieve. Also, different types of
banks are required to meet different priority sector
targets, based on their regional spread and access to
priority sectors.
Exhibit 5Targets and sub-targets set under priority sector lending
20
CategoryScheduled commercial banks (SCBs) Regional rural
banks
Small finance banks
Domestic commercial
banks (public or private)
and foreign banks with
over 20 branches
Foreign banks with less
than 20 branches
No. of banks 22 (private), 18
(public), 3 (foreign)
404310
Target
All priority sectors 40 percent of ANBC 40 percent of ANBC,
of which at least 8
percent has to be
lending to non-export
categories.
75 percent of ANBC,
of which up to 15
percent can be to
medium enterprises,
renewable energy, or
social infrastructure
75 percent of ANBC
Sub-Target
Agriculture18 percent of ANBC,
of which 10 percent is
prescribed for small
and marginal farmers
No sub-targets apply 18 percent of ANBC,
of which 10 percent is
prescribed for small
and marginal farmers
18 percent of ANBC,
of which 10 percent is
prescribed for small
and marginal farmers
Micro enterprises 7.5 percent of ANBC7.5 percent of ANBC 7.5 percent of ANBC
Weaker sections of
society
12 percent of ANBC15 percent of ANBC 12 percent of ANBC www.rmi-india.org /
12Banking on Electric Vehicles in India
Tradable PSL certificates allow banks with excess
lending to sell credits to banks that are unable to meet
requirements (see Exhibit 6). Banks failing to comply
with targets and sub-targets are required to contribute
shortfall to the Rural Infrastructure Development Fund
at a predetermined interest rate.
Exhibit 6Mechanism of PSL for Bank X with excess lending and Bank Y with shortfall in lending
Mandated Priority Sector
Lending, Bank X
Adjusted Net Bank Credit
(ANBC), Bank X
Adjusted Net Bank Credit
(ANBC), Bank Y
Mandated Priority Sector
Lending, Bank Y
Rural Infrastructure Development Fund
Net Bank Credit
Net Bank Credit
18% Agriculture sub-target
18% Agriculture sub-target
12% Weaker sections sub-target
12% Weaker sections sub-target
7. 5% Microenterprises sub-target
7. 5% Microenterprises sub-target
40%
40%
Investments eligible to be
trated as priority sector
Investments eligible to be
trated as priority sector
Actual Priority
Sector Lending,
Bank X
Actual Priority Sector
Lending, Bank Y
Sold as PSL Certificates
Shortfall in
Priority Sector
Lending, Bank Y
Excess in Priority
Sector Lending,
Bank X www.rmi-india.org /
13Banking on Electric Vehicles in India
Inclusion of Clean Technologies
under PSL
Off-grid solar and off-grid renewable energy solutions
for households were included within PSL guidelines
in 2012.
21
In 2015, renewable energy was included as
a priority sector. This widened the scope of lending
to larger installations and renewable energy-based
public utilities. In 2020, the lending limit to both
commercial and individual borrowers was doubled.
Solar equipment loans were also introduced as
eligible under agriculture lending. Exhibit 7 shows
the current guidelines for clean energy technologies.
Exhibit 7Inclusion of clean energy technologies in priority sector guidelines
Priority sectorLending guidelines Clean energy technologies included
Agriculture
Solar equipment loans for farmers
•
Installation of stand-alone solar agriculture pumps
and for solarising grid-connected agriculture pumps
• Installation of solar power plants on barren/fallow
land or on stilts on agricultural land owned by farmer
Renewable energy
Loans up to INR 30 crore for commercial borrowers and up to INR 10 lakh for households
•
Solar-based power generators, biomass-based
power generators, windmills, micro-hydel plants
• Renewable energy-based public utilities (i.e., street
lighting systems and remote village electrification) www.rmi-india.org /
14Banking on Electric Vehicles in India
Priority Sector Lending Trends
Current lending to priority sectors
In March 2020, India’s scheduled commercial banks
(SCBs) had INR 36 lakh crores ($US493 billion) in
outstanding priority sector credit (see Exhibit 8).
A large portion of this arose from sectors with
mandatory sub-targets (agriculture, microenterprises,
advances to weaker sections).
Different types of SCBs also lend differently across
priority sectors depending on their geographical
reach and risk appetites. For example, in March 2020,
private domestic banks and foreign banks’ largest
share of priority sector lending was to MSMEs. Public
banks lent equally to agriculture and MSMEs. Small
finance banks lent primarily to weaker sections of
society.
22
Historic impact of priority sector lending
PSL is India’s directed credit policy—a regulatory
instrument where governments mandate credit to
sectors whose low returns and long gestation periods
make for less lucrative investments in the short term.
In Japan, for example, directed credit promoted
industrial growth in the 1950s and 1960s. Exhibit 9
shows how PSL has supported sectoral growth in
India.
Exhibit 8Outstanding priority sector credit by SCBs as of March 2020 (in INR thousand crores)
23
Medium Enterprises
Weaker Sections
Export Credit
Renewable Energy
Micro & Small Enterprises
Agriculture& Allied Activities
Educational Loans
Housing
Others
Social Infrastructure
Total
1131
1080
728
460
131
50 17 15 1 1 3612
Note: Data accounts for approximately 90 percent of credit extended by SCBs. www.rmi-india.org /
15Banking on Electric Vehicles in India
Exhibit 10TCO comparison for example segments and use cases
Relevant
priority sector(s)
Impact of
PSL
Case study
Export credit
Higher
supply of
credit
Between 2001 and 2011, priority sector export credit grew around
20 percent year-on-year. In 2012, PSL guidelines were revised,
and export was no longer a priority sector for foreign banks with
more than 20 branches. As a result, credit fell by over 20 percent,
showing the importance of PSL in incentivising banks.
24
Agriculture
More
formalisation
of credit
Prior to the PSL guidelines, 71 percent of agricultural credit came
from informal moneylenders, and 4 percent from commercial
banks. Three decades of PSL later, moneylenders provided 31
percent of credit while commercial banks provided 52 percent.
25
All priority sectors
Lower NPAs Banks are often concerned with NPAs arising from risky priority
sector assets. However, RBI data shows that priority sector NPAs
declined from 51 percent of all NPAs in 2010 to only 27 percent in
2019.
26
Exhibit 9Historic impact of priority sector lending to sectoral growth
The Need for Priority Sector Status
for EVs
Policy reforms are making EVs more economical than
ICE vehicles on a total cost of ownership (TCO) basis
for several segments and use cases (see Exhibit 10).
Despite this improvement in economics, upfront cost
often still presents a barrier, as illustrated in Exhibit 11.
When financing is available, high interest rates,
short tenures, and low loan-to-value ratios present
a significant burden. This is contrary to ICE vehicles
which receive more affordable financing. Low-cost
and increased financing will hence be critical to drive
EV sales in the country.
Segment Use case Case study
Two-Wheelers
Goods delivery Electric 2Ws used for goods delivery are cheaper on a TCO basis than ICE equivalents.
27
With battery-as-a-service business
models, upfront costs are lower as well.
Three-Wheelers
Passenger (auto rickshaw)
Electric autos are close to TCO parity especially in tier 2 and tier 3 cities where shorter distances require smaller batteries.
28
Cars
Passenger (taxis) In the case of Delhi, electric taxis travelling 160 km daily can
achieve payback against diesel taxis in 1.9 years and against petrol taxis in 2.8 years.
29
www.rmi-india.org /
16Banking on Electric Vehicles in India
Exhibit 11Upfront cost and TCO comparisons for example vehicle segments in Karnataka
30
Upfront cost comparisonTCO comparison
6007.0
Thousands INR
INR/km
00.0
100
1.0
2.0
200
3.0
300
4.0
400
5.0
500
6.0
ICE Vehicle
302
6.20
402
1.90
571
2.40
EV Without
Subsidy
EV With Subsidy
3-Wheeler Auto-Rickshaws
Upfront cost comparisonTCO comparison
12.0
Thousands INR
INR/km
00.0
500
2.0
4.0
1000
6.0
1500
4.0
2000
8.0
2500
10.0
Petrol
915
11.60
1204
10.30
Diesel CNG
EV Without
Subsidy
EV With
Subsidy
4-Wheeler Commercial Passenger Vehicles
8.70
2114
6.10
1575
Cost differential
Cost differential
1522
7.80 www.rmi-india.org /
17Banking on Electric Vehicles in India
Priority sector status to EVs can address the lack of
availability of finance. There is a strong case for EVs
as livelihood-generating and supporting assets across
urban as well as rural India, especially for economically
weaker sections of society. Beyond enhancing
accessibility that increases the opportunities for jobs/
accessing markets, the operational cost savings
resulting from use of EVs over ICE vehicles enhance
the income of users to utilise for other avenues
such as healthcare, education, food, or housing.
With greater financing for EVs supplementing the
supply side push from the central government,
localisation will also increase, generating jobs in EV
and related manufacturing. As an increasing number
of aggregators moving towards electric fleets,
the ridehailing and delivery use cases are also expected
to see an increase in employment opportunities.
Simultaneously, electric vehicles present vast
benefits to society, such as:
Improved public
health
Approximately 5 lakh
(500,000) EVs subsidised
by the Delhi EV Policy
can avoid 159 tons of fine
particulate matter (PM2.5)
over the lifetime of the
vehicles.
31
Reduced carbon
dioxide emissions
EVs eligible under the
FAME II scheme can abate
over 74 lakh (7.4 million)
tonnes of CO2 over their
lifetime.
32
Enhanced energy
security
EVs eligible under the
FAME II scheme can result
in oil import savings worth
a cumulative INR 17.2
thousand crores ($US2.3
billion) over their lifetime.
33
The Potential of PSL to Scale
EV Finance
PSL inclusion can be an important near-term
solution to scaling EV finance in the following ways:
1.
Incentivising banks to lend to EVs: Inclusion can
directly incentivise banks to enhance lending as
a part of priority sector targets. Banks that have
not yet ventured into financing EVs may consider
doing so; banks that already finance EVs may be
motivated to create specialised financing options
with lower interest rates and longer loan tenures
(e.g., SBI’s Green Car Loan or Union Bank’s Green
Miles).
34
Overall, a mechanism to encourage a
higher supply of credit can motivate borrowers
opting for informal sources of financing (e.g.,
e-auto rickshaw drivers) to seek bank financing.
2.
Improving access to finance for NBFCs: NBFCs
will be important to expanding financing for EVs due to several factors. First, the vehicle finance market share of NBFCs has been increasing over the past five years, as illustrated in Exhibit 12. In 2016, NBFCs accounted for 43 percent of the formal vehicle financing market. By 2020, NBFCs had surpassed banks to account for 52 percent of market share. Second, NBFCs typically have a higher risk appetite and provide smaller pools of finance, many times in non-metropolitan areas. New fintech-based NBFCs have started enabling greater EV penetration in tier 2 and tier 3 cities. However, NBFCs have been facing a liquidity crunch since 2017 that has been worsened by the effects of COVID-19. This may translate to EV-first
NBFCs struggling to access low-cost finance from
banks. The PSL guidelines allow for co-origination www.rmi-india.org /
18Banking on Electric Vehicles in India
Exhibit 12Share and absolute number (in INR lakh crores) of outstanding vehicle finance advances,
March 2016 to March 2020
35
100%
March
2016
March
2017
March
2018
March
2019
March
2020
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Trend
Note: Data accounts for approximately 90 percent of credit extended by SCBs. NBFC data is provisional.
of loans to the priority sector between banks and NBFCs.
36
Both entities thus share risks and
rewards. Through this “co-lending model,” PSL
inclusion for EVs could also benefit NBFCs, allowing
them to leverage their greater on-ground presence
while benefiting from banks contributing lower-cost funds.
3.
Institutionalising the importance of EVs in India’s
financial industry: In addition to the direct impact
of increasing formal supply of credit, constituting
EVs as a priority sector can help institutionalise the asset class into the industry. As with any new regulation or provision, banks will be encouraged to build up their understanding of EV technology, policy, and business models. This will be important
when considering that limited awareness of the EV industry has led to greater risk perception and
thus underfinancing.
37
Lending may be slower to
pick up due to PSL inclusion, but the system-wide
shift in mindset created could be a powerful catalyst in India’s EV transition.
SCBs 1.51.71.9 2.02.2
NBFCs 1.11.11.7 2.02.4 www.rmi-india.org /
19Banking on Electric Vehicles in India
Design Considerations
for Priority Sector Lending
Guidelines for EVs
Key Considerations
Most priority sectors feature qualifying
criteria for loans to ensure meeting PSL’s goal
of expanding financial access and supporting
employment opportunities. This makes it important
to consider the socioeconomics and scalability of
new amendments. Techno-economic viability of the
segments and banks’ receptiveness to the segments
are also important to consider due to their influence
on lending potential. Hence, to include EVs as a
priority sector, parameters listed in Exhibit 13 must
be carefully deliberated upon.
Exhibit 13Parameters to assess segments for PSL inclusion for EVs
Socio-economic
potential
Which segment-use case
combinations currently
lack the most access to
finance?
Stakeholder
acceptability
Which segment-use case
combinations may be
perceived as least risky
by banks and NBFCs to
finance?
Scalability
With greater access to
finance, which segment-
use case combinations are
likely to be most scalable
from a sales penetration
perspective?
Techno-economic
viability
Which segment-use case
combinations have the
most available products
to perform required duty
cycles?
Livelihood generation
potential
Which segment-use case
combinations have the
potential to support
the greatest number of
livelihoods? www.rmi-india.org /
20Banking on Electric Vehicles in India
Assessment of PSL Inclusion
Methodology and results
A questionnaire survey was carried out to get expert
input on the parameters and objective questions in
Exhibit 13. Respondents to the survey included
stakeholders representing financial institutions, OEMs,
fleet operators, e-commerce, and civil society.
Respondents compared various segment-use case
combinations and ranked options in response. Exhibit
14 builds off the survey results, proposing low,
medium, and high ratings for EV segments and use
cases for each parameter. The ratings should be
considered as indicative only.
Exhibit 14Assessment of EV segments and use cases for inclusion in the priority sector
lending guidelines
38
E-2WPrivateDelivery
Socio-economic potential MediumHigh
Livelihood generation potentialMediumHigh
ScalabilityHighHigh
Techno-economic viability HighHigh
Stakeholder acceptability HighHigh
Remarks
E-2Ws have high sales forecasts, are
the most economically viable, and have
high model availability. When privately
owned, they present low financing risk.
Although generating income for the
buyer, e-2Ws used for delivery present
higher financing risk, given reliability
concerns expressed by operators.
Availability of finance can influence
purchase decisions.
E-3WE-rickshaws and
e-carts
Auto-rickshaws
(passenger)
Carriers
(delivery)
Socio-economic potential HighMediumHigh
Livelihood generation potentialHighHighHigh
ScalabilityHighMediumHigh
Techno-economic viability HighMediumMedium
Stakeholder acceptability MediumMediumHigh
Remarks
E-3W ownership supports job creation but presents high asset and business model risk,
which banks may be less receptive to financing. 3W financing currently is dominated
by moneylenders; hence, PSL inclusion would be critical to scaling the sector. While
EESL plans to lease e-3Ws in the near term, it will be important to build the financing
capacity of the market simultaneously. www.rmi-india.org /
21Banking on Electric Vehicles in India
E-4WPrivate Ridehailing Commuter
services
Carriers
(delivery)
Socio-economic
potential
LowLowLowMedium
Livelihood
generation potential
LowMediumMediumMedium
Scalability LowLowLowMedium
Techno-economic
viability
LowLowLowLow
Stakeholder
acceptability
HighLowLowMedium
Remarks
Private electric cars
are the lowest-risk
EV segment, thus
highly acceptable by
banks. PSL inclusion
would likely scale the
segment due to low
credit-risk profile of
buyers but hold back
financing of other
segments. Model
availability is low;
TCO parity exists, but
the payback period
may be long.
Ridehailing presents
higher risk than the
private use case,
although it supports
job creation. The
techno-economic
viability depends
on extremely high
utilisation of 200-
plus km/day.
Commuter services
are a prominent
shared mobility
use case; however,
the borrowers are
typically companies,
with financing
dependent on their
balance sheets.
Model availability is
low, especially given
the high utilisation
required.
E-BusesPublicPrivate
Socio-economic potential LowLow
Livelihood generation potentialLowLow
ScalabilityLowLow
Techno-economic viability LowLow
Stakeholder acceptability LowLow
Remarks
Borrowers are state transport undertakings or private operators. Loan ticket sizes are high, in addition to high financing risk. www.rmi-india.org /
22Banking on Electric Vehicles in India
Lending limits
Another possible criterion that could be considered
is lending limits for individuals and fleets. Lending
limits are ticket size caps above which loans do not
qualify as PSL. They ensure that large institutions
and lower-risk borrowers do not disproportionately
benefit from priority sector inclusion. They are important
when higher cost assets are being financed. For
example, beyond INR 30 crores ($US4 million), bank
financing for commercial solar installations does not
qualify under PSL. Lending limits would be relevant for
EV segments with a higher variation of cost to
concentrate priority sector lending towards mass-
market adoption instead of small-scale adoption of
luxury models.
The FAME II scheme already accounts for a similar
maximum asset cost cap on eligible vehicles.
39
If
exploring the inclusion of vehicles not covered by
FAME II (e.g., private e-cars), the RBI could opt for
a lending limit here. This would help enhance the
scalability and socioeconomic potential of the
inclusion.
Recommendations
There are a number of ways to combine the segments assessed above into portfolios of segments and use cases for PSL inclusion. Each combination has its benefits and trade-offs. Three options that we are proposing for consideration are:
All light vehicles:
e-2Ws, e-3Ws, e-4Ws
Market-ready
segments:
e-2Ws, e-3Ws, commercial
e-4Ws
FAME II segments:
e-2Ws, e-3Ws, commercial
e-cars, public e-buses
The RBI may also consider including all segments of EVs under the PSL guidelines. However, lack of specificity may result in low-risk segments such as private e-cars also receiving priority sector loans. At this stage, the high ticket size and financing risk of e-buses may also make route 2 above less optimal. Focusing on the market-ready segments combination
may thus offer the ideal starting point.
Other Key Considerations
It is important to note that PSL offers a largely voluntary pathway for banks. Increased lending is not guaranteed unless a sub-target is also implemented simultaneously.
Currently, bank credit to NBFCs for on-lending to agriculture and micro and small enterprises can be classified as priority sector lending if it meets certain pre-determined criteria. This provision will be valid until March 2022. If it were to continue past this date, EVs could also be included. This would allow the inclusion of EVs in the PSL guidelines to also extend to NBFCs, which are important lenders to vehicle finance. www.rmi-india.org /
23Banking on Electric Vehicles in India
Next Steps and Enablers
Initial Next Steps to
Operationalise the Concept
Ultimately, getting from PSL recommendations
to reform will require engagement of various
stakeholders. The importance of a unified voice on
PSL inclusion for EVs is exemplified by the example
of renewable energy, in which the Ministry of New and
Renewable Energy worked closely with other
government ministries and commercial banks to
advocate for PSL inclusion.
40
This administrative will
and consensus building was essential to recognising
renewable energy as a national priority and thus a
priority sector for lending.
To include EVs in priority sector lending, a relevant
government agency will need to take lead and liaise
with the RBI. NITI Aayog is doing this and has submitted
a proposal to the RBI.
41
There is also a need to
convene other ministries to discuss and align on the
concept and the design of preliminary guidelines.
Other stakeholders—such as state governments,
FICCI, the Indian Banks Association, the Society of
Manufacturers of Electric Vehicles, Society of Indian
Automobile Manufacturers, e-commerce/logistics
companies, and civil-society organisations—will be
important to engage in the design process.
Once the RBI recognises the need for including
EVs in PSL guidelines, it can constitute an internal
working group to finalise the guidelines. It may
consider inviting closed or public comments on
proposed qualifying criteria via a consultative paper.
Throughout this process, the lead government
agency and other advocates will be responsible for
driving further consensus for PSL inclusion among
financial institutions and industry.
Enablers to Maximising the Impact
of Inclusion
Including EVs as a priority sector is a crucial near-term
solution to scaling financing. However, to maximise the
impact of the reform, supportive mechanisms will
also need to be enacted simultaneously and in the
medium-term. A few interventions that can work
directly with PSL to rapidly increase lending are
outlined below.
1.
Sub-target for clean energy solutions: Within
the PSL guidelines, a sub-target encompassing renewable energy and EVs would incentivise lending in these sectors by creating a clear target
and penalty mechanism for banks that fail to expand their lending to these sectors. This would serve to further institutionalise the importance of finance to the energy transition, and consequently, the importance of the energy transition to finance in India. Even at as low as 1–2 percent of ANBC, the finance mobilised towards clean energy solutions would be significant.
At that scale, banks would be able to understand EVs more intuitively and embark on a faster curve
to lower NPAs across the industry.
2.
EVs included as an infrastructure sub-sector:
The Harmonised Master List of Infrastructure Subsectors, compiled by the Department of Economic Affairs, Ministry of Finance, provides financing and taxation benefits to predetermined subsectors in order to lower cost of credit and improve flexibility for investors.
42
For example,
subsectors with this ‘infrastructure status’ benefit from a higher limit on external commercial
borrowings (allowing for cheaper funding in foreign currencies). They are also eligible for long-term loans and longer amortisation periods and can receive financing assistance from specialised agencies like the India Infrastructure Finance Company Limited.
43
Inclusion of electric mobility as an infrastructure subsector would create an enabling environment for large investments in the sector such as EV and
battery manufacturing, charging infrastructure deployment, and electric bus rollout. With greater
availability of financing upstream, the capital cost
associated with EV ownership can be lowered, www.rmi-india.org /
24Banking on Electric Vehicles in India
improving the economic viability and affordability
of EVs.
3. EV loans as a reporting category: Currently, no
data is available regarding number of EV loans
advanced, outstanding advances, or NPAs. This
information asymmetry in the industry is a
barrier to understanding financing patterns and
thus improving the flow of finance. To solve this
problem, RBI can incorporate EV loans as a unique
reporting category under personal loans in the
Basic Statistical Returns (BSR). Additional modes
of data collection where EVs can be included as a
sector include the Sector-wise and Industry-wise
Bank Credit (SIBC) returns, and the Supervisory
Returns for NBFCs. This data can then be
aggregated and shared via RBI’s Database on the
Indian Economy.
In the long term, constituting EVs as a separate
reporting category may also create a market for
specialised EV loan products with lower interest
rates and longer tenures. A supportive taxonomy
on sustainable finance, already being worked on
by the Ministry of Finance, can further support
mainstreaming of EVs in the financial industry.
44
4.
Loan guarantee programs: Priority sector lending
helps improve supply of credit but does not directly address challenges such as interest rates
and equated monthly instalments. In the short term, interest rate subventions can play this part,
as the Delhi EV Policy has demonstrated through its proposed subvention scheme. In the medium to long term, there must continue to be a focus on solutions that reduce inherent risks. For example, loan guarantees covering specific risks have the potential to increase liquidity in the EV sector alongside PSL. Multilateral financiers or national development banks can offer such guarantees to banks and NBFCs in India with predetermined lending terms.
45
The NITI Aayog
and World Bank first-loss risk-sharing facility is a significant move in this direction. The risk cover
will provide banks with greater confidence in lending and in turn improve offtake of priority sector provisions for EVs.
Exhibit 15Wider interventions to unlock EV finance
46
Stakeholders beyond the financial industry can also implement complementary
initiatives to PSL and enable greater financing for EVs:
•
OEMs: Product guarantees from OEMs can assure financiers of the product quality and performance
of EV models. Warranties for OEMs can cover the repairs and replacement of parts, ensuring buyers
are not presented with additional costs. Buyback programmes where OEMs guarantee repossession
and resale can create clarity around resale value. Battery OEMs can similarly lead in the creation of
battery repurposing and recycling programs.
•
Aggregators and e-commerce providers: Fleet aggregators, delivery companies, and e-commerce
providers can provide credit guarantees and utilisation guarantees to driver-partners. This can enhance the confidence of financiers in providing loans for this use case. More broadly, electrification targets through initiatives such as EV100 can create ambitious market signals for policy, manufacturing, as well as financing.
•
State governments: State EV policies can galvanise OEMs, aggregators, and e-commerce through
the establishment of state-level targets. Interest rate subvention schemes can create an early learning curve for financiers, especially on high-risk segments such as e-3Ws. Incentives for OEMs to assure buybacks and warranties can also be offered. www.rmi-india.org /
25Banking on Electric Vehicles in India
Conclusion: Helping India
Bank on EVs
Incentives, investment, and innovation are
driving India’s rapidly increasing EV
adoption. Finance will be critical to achieving
scale. However, the real and perceived risks
of a relatively new asset class have meant that
financial institutions like banks and NBFCs have
not yet built up their confidence or capabilities of
financing the sector.
India’s EV finance market could reach INR 3.7 lakh
crores ($US50 billion) in advances by 2030.
47
Priority
sector lending can be a crucial pathway to helping
realise this potential. If designed well, it can incentivise
banks to finance EVs and improve finance for NBFCs,
while institutionalising the importance of the EV
sector within the financial industry. Considering
socioeconomic potential, livelihood generation
potential scalability, technoeconomic viability, and
stakeholder acceptability, market-ready electric
2Ws, 3Ws, and commercial 4Ws currently offer the
ideal starting point for PSL inclusion.
To enable this reform, several actors will need to
align on a vision and also consider supplementary
solutions. Implementing the solutions outlined in
the report can help maximise the impact of PSL
inclusion for EVs. Most importantly, these solutions
are mutually beneficial for all:
EV buyers
—————————————————————————————————
Greater flow of and lower cost of
financing will yield higher sales
that can reap economic, social,
and public health benefits.
Government of India
————————————————————————————————————————————————————————————————————————————
Creating an enabling environment for EV adoption will be key to India’s
development goals. Focusing on EV finance will also support India’s ambition
to decarbonise its vehicle stock, aligning with its target of net-zero emissions
by 2070.
Banks and NBFCs
—————————————————————————————————
Proactively financing EVs will
showcase financial institutions’ ESG
credentials, unlocking better priced
better-priced debt financing going
forward.
Reserve Bank of India
—————————————————————————————————
Reforming PSL to promote
green lending will reinforce RBI’s
commitments as a member of
the Network for Greening the
Financial System.
48
EV industry (OEMs, fleet
owners/aggregators)
—————————————————————————————————
PSL inclusion and consequent
boost to EV finance will result in
improved EV demand and sales. www.rmi-india.org /
26Banking on Electric Vehicles in India
1. M
A Toolkit of Solutions to Mitigate
Risks and Address Market Barriers,
NITI Aayog and Rocky Mountain Institute,
January 2021, https://rmi-india.org/insight/
mobilising-finance-for-evs-in-india/.
2. Ministry of Heavy Industries and Public
Enterprises (Department of Heavy Industry), S.O.
2258(E), Gazette of India, 11 June 2021.
3. “Government has approved Production Linked
Incentive (PLI) Scheme for Auto Industry and Drone Industry to enhance India’s manufacturing capabilities,” Press Information Bureau, September 15, 2021. https://pib.gov.in/PressReleasePage.aspx?PRID=1755062.
4.
RMI and RMI India analysis.
5. HT Correspondent, “Karnataka tweaks
Electric Vehicle policy to attract investment,” Hindustan Times, May 28, 2021, https://www.hindustantimes.com/cities/others/karnataka-tweaks-ev-policy-to-attract-investment-101622142001614.html.
6.
News reports.
7. Shruti Mishra, ETAuto, “Putting EV at forefront,
Indian auto inc proposes USD 13 bn investment in 2021,” The Economic Times, January 08, 2022, https://auto.economictimes.indiatimes.com/news/auto-technology/bringing-ev-tech-to-the-fore-indian-auto-sector-invests-usd-13b-in-2021/88514223.
8.
Shruti Mishra, ETAuto, “EV funding hits all-time
high in 2021 as investors bet big on support systems,” The Economic Times, January 04, 2022, https://auto.economictimes.indiatimes.com/news/industry/ev-funding-scales-new-peak-in-2021-as-investors-bet-big-on-support-systems/88674432.
9.
ANI PR, “Axis Bank and GuarantCo, through
PIDG, announce guarantee platform with a programme size of USD 300 million to accelerate transition to electric vehicle eco-system in India,” The Print, November 17, 2021, https://theprint.in/ani-press-releases/axis-bank-and-guarantco-through-pidg-announce-guarantee-platform-with-a-programme-size-of-usd-300-million-to-accelerate-transition-to-electric-ve-
hicle-eco-system-in-india/767296/.
10.
Shruti Mishra, ETAuto, “Putting EV at forefront,
Indian auto inc proposes USD 13 bn investment in 2021,” The Economic Times, January 08, 2022, https://auto.economictimes.indiatimes.com/news/auto-technology/bringing-ev-tech-to-the-fore-indian-auto-sector-invests-usd-13b-in-2021/88514223.
11.
Podishetti Akash, “Ola Electric raises $200 mn
funding, valuation touches $3 bn,” Mint, October 01, 2021, https://www.livemint.com/companies/news/softbank-leads-ola-electric-s-200-mn-funding-round-valued-at-3-bn-11633005908147.html.
12.
Vahan Sewa Dashboard, Ministry of Road
Transport & Highways, Government of India, https://vahan.parivahan.gov.in/vahan4dashboard.
13.
Mobilising Finance for EVs in India: A Toolkit of
Solutions to Mitigate Risks and Address Market Barriers, NITI Aayog and Rocky Mountain Institute, January 2021, https://rmi-india.org/insight/mobilising-finance-for-evs-in-india/.
14.
Ibid.
15. Ibid.
16. Lijee Philip and Saloni Shukla, ET Auto, “Niti
Aayog, World Bank ready electric vehicles financing push,” The Economic Times, November 01, 2021, https://economictimes.indiatimes.
Endnotes www.rmi-india.org /
27Banking on Electric Vehicles in India
com/industry/renewables/niti-aayog-world-
bank-ready-electric-vehicles-financing-push/
articleshow/87448054.cms.
17.
“FICCI Urges Govt to Extend FAME-II Scheme
Till 2025 to Boost Electric Vehicle Demand,” Press Trust of India, News 18, July 04, 2020, https://www.news18.com/news/auto/ficci-urges- govt-to-extend-fame-iischeme-till-2025-to- boost-electric-vehicle-demand-2698069.html;
and “NITI Aayog Reviews EV-related Policies, Recommends Bringing Financing Under Priority Sector Lending,” Moneycontrol, August 24, 2020.
18.
Reserve Bank Staff College, Functions and
Working of RBI, Reserve Bank of India, https://rbidocs.rbi.org.in/rdocs/ Publications/PDFs/RWF15012018_ FCD40172EE58946BAA647A765DC942BD5. PDF.
19.
ANBC refers to the outstanding credit of the
bank after accounting for bills rediscounted by the RBI and bonds in non-statutory liquidity ratio category (or investments eligible to be treated as priority sectors). Targets may also be computed on the bases of credit equivalent of off-balance sheet exposures (CEOBE) if it is higher.
20.
Master Directions – Priority Sector Lending
(PSL) – Targets and Classification, Reserve Bank of India, September 2020, https://www.rbi.org. in/Scripts/BS_ViewMasDirections.aspx?id=11959;
and Database on Indian Economy, Reserve Bank of India, https://dbie.rbi.org.in .
21.
Revised Guidelines on Priority Sector Lending –
Targets and Classification. July 2012, Reserve Bank of India, https://www.rbi.org.in/scripts/ BS_PressReleaseDisplay.aspx?prid=26882.
22.
Database on Indian Economy, Reserve Bank of
India, https://dbie.rbi.org.in.
23. Ibid.
24. Re-Prioritizing Priority Sector Lending in India:
Impact of Priority Sector Lending on India’s Commercial Banks, Nathan Associates, Inc., December 2013, https://www.nathaninc.com/
wp-content/uploads/2017/10/Priority_Sector_ Lending_India.pdf.
25.
Ibid.
26. Nilofar Bano and Manish Sharma, Priority sector
lending in India: Revisiting the issue under new guidelines of RBI, Int J Appl Res 2020;6(12):394- 398, DOI: 10.22271/allresearch.2020.v6.i12f.8136.
27.
“Deliver Electric Delhi: Pilot on Electrification of
Final-mile Delivery Vehicles in Delhi,” Dialogue and Development Commission of Delhi and Rocky Mountain Institute, 2020, https://rmi.org/ insight/deliverelectric-delhi/.
28.
“India Business Guide to EV Adoption,” World
Business Council for Sustainable Development, 2019. https://www.wbcsd.org/Programs/ Cities-and-Mobility/Transforming-Mobility/ Transforming-Urban-Mobility/Emobility/ Resources/India-Business-Guide-to-EV-Adoption.
29.
Mandar Patil and Akshima Ghate, “The Role
of Incentives in Reducing the Total Cost of Ownership of Electric Vehicles in Delhi, India,” Oxford Energy, 2020, https://www.oxfordenergy. org/wpcms/wp-content/uploads/2020/07/ OEF122.pdf.
30.
RMI and RMI India analysis.
31. Accelerating Delhi’s Mobility Transition: Insights
from the Delhi Urban Mobility Lab, Dialogue and Development Commission of Delhi and Rocky Mountain Institute, https://rmi.org/insight/ urban-mobility-lab-delhi/.
32.
India’s Electric Mobility Transformation:
Progress to date and future opportunities, NITI Aayog and Rocky Mountain Institute (RMI), 2019. https://rmi.org/insight/indias-electric-mobility- transformation/.
33.
Ibid.
34. State Bank of India, “Green Car Loan: For
Electric Cars,” https://www.sbi.co.in/web/ personal-banking/Loans/auto-loans/green-car- loan; and Union Bank of India, “Union Green Miles,” https://www.unionbankofindia.co.in/ www.rmi-india.org /
28Banking on Electric Vehicles in India
english/union-green-miles.aspx.
35. Database on Indian Economy, Reserve Bank of
India, https://dbie.rbi.org.in.
36. Co-Lending by Banks and NBFCs to Priority
Sector, November 2020, Reserve Bank of India,
https://www.rbi.org.in/Scripts/NotificationUser.
aspx?Id=11991&Mode=0.
37.
Soman, Abhinav, Karthik Ganesan, and
Harsimran Kaur, India’s Electric Vehicle Transition: Impact on Auto Industry and Building the EV Ecosystem, 2019, New Delhi: Council on Energy, Environment and Water, https://www. ceew.in/sites/default/files/CEEW-IndiaElectricVe hicleTransitionReportPDF26Nov19.pdf.
38.
Mobilising Finance for EVs in India: A Toolkit of
Solutions to Mitigate Risks and Address Market Barriers, NITI Aayog and Rocky Mountain Institute, January 2021, https://rmi-india.org/ insight/mobilising-finance-for-evs-in-india/.
39.
“Models Under FAME,” Ministry of Heavy
Industries, Government of India, https://fame2. heavyindustry.gov.in/ModelUnderFame.aspx.
40.
“Priority sector lending tag likely for RE,”
Projects Monitor, February 02, 2015, https:// www.projectsmonitor.com/daily-wire/priority- sector-lending-tag-likely-for-re/.
41.
Lijee Philip and Saloni Shukla, ET Auto, “RBI
weighs priority sector loans for electric vehicles,” December 06, 2021, The Economic Times, https://economictimes.indiatimes. com/industry/renewables/rbi-weighs-
priority-sector-loans-for-electric-vehicles/ articleshow/88112893.cms.
42.
Ministry of Finance (Department of Economic
Affairs), F. No. 13/1/2017-INF, Gazette of India, 24 August 2020.
43.
ET Bureau, “Govt clears harmonised list;
identifies 5 main sectors & 29 subsectors that should get infrastructure status,” March 02, 2012, The Economic Times, https:// economictimes.indiatimes.com/news/economy/ infrastructure/govt-clears-harmonised-list- identifies-5-main-sectors-29-subsectors- that-should-get-infrastructure-status/ articleshow/12104498.cms
44.
“DEA holds Sustainable Finance Collaborative
consultation with UNDP,” August 28, 2020, Press Information Bureau, https://pib.gov.in/ PressReleaseIframePage.aspx?PRID=1649406.
45.
Mobilising Finance for EVs in India: A Toolkit of
Solutions to Mitigate Risks and Address Market Barriers, NITI Aayog and Rocky Mountain Institute, January 2021, https://rmi-india.org/ insight/mobilising-finance-for-evs-in-india/.
46.
Ibid.
47. Ibid.
48. “RBI joins Network for Greening the Financial
System,” Reserve Bank of India, April 29, 2021, https://www.rbi.org.in/Scripts/BS_ PressReleaseDisplay.aspx?prid=51496. Banking on Electric Vehicles in India: A Blueprint for Inclusion of EVs in Priority Sector Lending
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