Is this India’s greenest bank?

Yes Bank’s head of responsible banking talks to RTCC about green bonds, solar growth and cleaning up coal power

India aims to install 100GW of solar power by 2022 (Pic: VM2827/Flickr)

India aims to install 100GW of solar power by 2022 (Pic: VM2827/Flickr)

By Megan Darby

Launched in 2004, Yes Bank has grown aggressively to become India’s fourth largest private bank.

On climate change, it can claim several firsts: the sector’s first sustainability policy, the country’s first green bond and a goal for investment in 5GW of renewable energy by 2019.

Srinath Komarina, senior vice president of responsible banking, talks to RTCC about solar ambition, pesky government regulations – and why coal is also a major item in the loan book.

As a new entrant on the scene, Yes Bank identified renewable energy as a growth area at a time not many people were talking about it, says Komarina. “We could clearly see this was one of the winning areas.”

It worked with companies right through the supply chain, from turbine manufacturers to installers. “We are reaping quite a good dividend right now.”

The bank led investment in one of the world’s biggest solar projects, a 151MW array in Neemuch, Madhya Pradesh.

In a social innovation Yes Bank is particularly proud of, wooden crates used for the solar panels were converted into desks for nearby schools.

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Narendra Modi, at the time Gujurat’s chief minister, joined his Madhya Pradesh counterpart at the launch in February 2014.

Now, as prime minister, Modi has ambitious plans to install 175GW of renewable power generation capacity across the country by 2022.

It was with government encouragement that Yes Bank announced its 5GW at the RE-Invest conference in February.

That was double the rate of investment it committed to five months earlier, as one of a handful of Indian corporates to attend UN secretary general Ban Ki-moon’s climate summit in New York.

But there remain regulatory barriers to mobilising large scale clean energy investment in India, Komarina says.

For one, there are limits on the proportion of funds banks can loan to each sector. Renewable energy is lumped in with conventional power businesses.

“If you have investment in one or two big power plants, that brings you very close to the limit,” says Komarina.

“It would be good if the renewable energy sector could have a separate sectoral cap, because it is a new and emerging field.”

The same applies to conglomerates like Tata. If a bank is already heavily invested in a certain business group, it may not have leeway to back expansion into new areas.

Komarina says: “From a bank perspective, we would like to maintain a relationship with the car manufacturing unit at the same time as giving investment to the wind energy unit.”

Then there are priority spending rules. The Reserve Bank of India requires lenders to invest 40% of their money into sectors including agriculture, microbusinesses and housing.

Yes Bank argues renewable energy should be added to that list. While the bank might benefit now from a lack of competition in clean energy, Komarina says the sector needs more players.

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While Yes Bank is a leading proponent of the renewable sector in India, it continues to invest in coal, the most polluting fossil fuel – and refuses to disclose how much.

Modi aims to bring electricity to more than 300 million Indians currently going without. Solar alone is not going to bridge that gap.

“From a business community perspective, given the whole energy demand for India, there is a huge demand for coal,” says Komarina.

“The use of coal is inevitable, but then how do you make it more sustainable?

Rajendra Pachauri, former chair of the UN’s top climate science body, praised Yes Bank for setting “a very high benchmark” in sustainability principles throughout its business.

One of the case studies in Yes Bank’s sustainability report regards “Coldry”, a technology brought in from Australia to make India’s lignite cleaner to burn.

It works by drying out the lignite, a brown variety of coal with high moisture content, before using it to generate power.

That results in coal with 280% higher calorific value, it claims, generating “substantially lower” greenhouse gas emissions than lignite in its natural form.

While it is far from the lowest carbon way of generating electricity, it makes a cheap source of fuel a bit less dirty.

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