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Indian Solar Loan Program

The Indian Solar Loan Program was established in 2003 in the Karnataka State of Southern India, in order to bring Solar Home Systems (SHS) to rural households in the area.

Historically, the Karnataka State has relied on kerosene lanterns for light. This option is not nearly as bright as solar options. It also poses a higher risk of danger, as kerosene lanterns emit unhealthy smoke and fumes, and they are known to burn people. Also, much of rural India has little to no access to the electric grid. Therefore SHS is a highly effective lighting system available to this area due to its reliability and its low impact on the environment, however it is more expensive than other lighting options, which is why loans are necessary in order for it to be successfully implemented in rural India.

Loans from the Indian Solar Loan Programme are available to households and small businesses. Borrowers pay for 15% of the lighting system up front and then continue to repay the loan over the course of 5 years.

This program works well in India because of its previously established solar lighting vendors, and because of its already successful banking system. In India, banks are required to lend 40% of their loans to “priority purposes” - causes that have a positive social impact. Because the Indian Solar Loan Program involves a feasible social benefit, many Indian banks have gotten involved. In fact, 1/3 of the bank branches in Karnataka are involved in the program. The following banks are a part of the Indian Solar Loan Program: Canara Bank, Tungabhadra Grameen, Chitradurga Grameen, Sahyadri Grameen, Kolar Grameen, Syndicate Bank, Bijapur Grameen, Malaprabha Grameen, Varada Grameen, Netravathi Grameen.

Vendors involved in the program are: Kotak Urja Private Limited, Selco Solar Light Private Limited, Shell Solar India Private Limited, Tata BP Solar India Limited.

The Indian Solar Loan Programme is only available to people living above the poverty line. People living below the poverty line can access Solar Home Systems from Self Help Groups. The Indian Solar Loan Programme however does give loans to these Self Help Groups, therefore allowing people living below the poverty line to access Solar Home Systems.

According to surveys recording customer satisfaction, recipients of loans have been overall happy with the program. 5% of customers reported they found the program to be “very good”, 92% said it was “good” and 3% said they were “unhappy” with the outcome of their involvement.

Though this program is still most present in the Karnataka State, similar programs have also begun in nearby Kerala State and Andhra Pradesh State.