Techno Hour

Niti Aayog and World Bank’s joint initiative to make financing for EVs easier

In its bid to boost the EV sector, Niti Aayog has been collaboratively working with the World Bank to facilitate a faster and more convenient financial of electric vehicles. The news comes after the lack of enthusiasm of high-street banks due to a small resale market of the EV sector.

The two firms have earmarked a $300-million as the ‘first loss risk sharing instrument’ with State Bank of India as its program manager. This would help them in garnering around $1.5 billion for financing EVs. According to Amitabh Kant, CEO of Niti Aayog, the instrument is also expected to bring down the cost of financing of EVs by as much as 12 per cent.

The funds of the $300 million risk-sharing instrument, which has been institutionalised with SBI, will be available for all financial institutions as a first-loss instrument. Kant added that currently, the rate of interest for electric two-wheelers and electric three-wheelers stands at the range of 20-25 per cent. However, that is expected to come down to 10-12 per cent.

At present, electric vehicles do not have a robust resale market in place, which makes it hard for banks to ascertain their residual value. Result? Higher cost of financing for EVs compared to ICE vehicles and this is what the Think Tank and the World Bank has been looking to resolve.

Moreover, experts on the matter have stated that many EV buyers also lack credit history. “We are not being risk averse, but a lot of these clients are new to credit and from segments which are generally catered to by NBFCs,” said a lender. What is worse is the fact that NBFCs and banks are still not looking at EV financing as a lucrative business opportunity.

Hopefully, the joint initiative by Niti Aayog and the World Bank will open doors of opportunities for the EV market and if not, set example for other financial institutions.

Also read:- The impact of technology on the Travel and Hospitality Industry

Share

Recent Posts

Karnataka to Ban Hookah Bars, Raise Age Limit to 21 for Tobacco Use

In a move aimed at safeguarding the health and well-being of its citizens, Karnataka Karnataka…

1 day ago

India-Canada Khalistan Dispute: Tensions Escalate Amidst Latest Developments

The India-Canada Khalistan dispute has resurfaced with a vengeance, casting a shadow over the historically…

2 days ago

The Complex India-Canada Khalistan Dispute: Diplomatic Strain and Allegations

The dispute between India and Canada concerning the Khalistan issue has escalated as Canada recently…

3 days ago

Empowering Artisans: An In-Depth Look at the PM Vishwakarma Scheme

Artisan communities have always been the bedrock of creativity and craftsmanship in a diverse and…

3 days ago

Rajat Khare Venture Capitalist & founder of Boundary Holding invests in Indian Artificial Intelligence startup

European investment fund Boundary Holding has announced its investment in Asteria Aerospace, a robotics and…

1 week ago

The Unstoppable Novak Djokovic : 24 Grand Slams and Counting

In the hallowed grounds of Arthur Ashe Stadium on Sunday, in the bustling city that…

2 weeks ago