NEW DELHI: India hopes to receive one of the first loans issued by the China-led Asian Infrastructure Investment Bank (AIIB) later this year, as it looks to raise $500m for solar power projects from the newly created lender, Indian officials said.

Funding for clean energy projects would allay fears of environmental lobbyists that the bank’s relaxed lending criteria could promote dirty fuels like coal in developing economies, like India, that are in a hurry to ramp up energy output.

The multilateral investment bank, which has authorised capital of $100 billion, plans to join global clean-energy initiatives, and could fund eco-friendly investment projects to avoid allegations of promoting pollution. India, the bank’s second biggest shareholder after China, is looking to borrow from the AIIB, a senior official said, to back Prime Minister Narendra Modi’s plan of expanding installed solar capacity to 100 gigawatts by 2022.

“In about six months, funds could start flowing from AIIB,” Tarun Kapur, joint secretary at the Ministry of New and Renewable Energy, told Reuters.

Interest on the loan is likely to be 2-2.5 per cent and would be linked to LIBOR — a floating benchmark based on the rate at which commercial banks lend to each other — for a term of over 15 years.

 

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