Meta Title: Bank Loans for Biomass Power Plants in India | Top Banks & Loan Process
Meta Description: Explore India’s top banks offering loans for biomass power plants. Learn about loan eligibility, interest rates, required documents & the step-by-step financing process.

🌱 Introduction: Financing the Green Future

As India moves towards a sustainable energy future, biomass power plants are gaining momentum for their eco-friendly and cost-effective energy solutions. However, setting up or expanding a biomass plant requires significant capital, which can be supported through bank loans, subsidies, and financing schemes.

In this blog, we highlight the top banks in India offering loans to established biomass plants, explain the loan application process, and share key eligibility and documentation requirements.

🏦 Top Banks Offering Loans for Biomass Plants in India

Here are some leading banks and financial institutions actively supporting biomass power projects under renewable energy finance:

✅ State Bank of India (SBI) – Renewable Energy Loan Scheme

• 🟩 SBI offers dedicated financing for biomass and renewable energy under “Project Finance for Green Energy”.
• 🟩 Loans available for new projects as well as expansion of existing biomass units.
• 🟩 Up to 70–75% of total project cost can be financed.
• 🟩 Competitive interest rates, typically between 9%–11% p.a.
• 🟩 Moratorium of 6–12 months during plant commissioning.

✅ Punjab National Bank (PNB) – Green Energy Loans

• 🟩 Loan financing available under PNB Green Energy Financing Scheme.
• 🟩 Covers biomass plants, cogeneration, and biogas projects.
• 🟩 Offers long-term repayment up to 10 years.
• 🟩 Backed by government guidelines and refinancing support.
• 🟩 Loans cover equipment, land development, installation, and civil works.

✅ Indian Renewable Energy Development Agency (IREDA)

• 🟩 A Government of India PSU under the Ministry of New and Renewable Energy (MNRE).
• 🟩 Specializes in financing renewable energy projects, including biomass and waste-to-energy plants.
• 🟩 Offers long-tenure loans with flexible repayment and low interest rates (around 8% to 10.5%).
• 🟩 Also supports retrofitting and performance improvement of existing plants.

✅ NABARD – Refinance Scheme for Biomass Projects

• 🟩 NABARD offers refinance assistance to banks lending to biomass and agri-based energy projects.
• 🟩 Primarily applicable to rural and semi-urban biomass plants.
• 🟩 Up to 95% refinance support available for banks and NBFCs.
• 🟩 Interest subsidy support from MNRE under various schemes.

✅ Bank of Baroda – Renewable Energy Loan Products

• 🟩 Offers loans for both captive and commercial biomass power projects.
• 🟩 Loans available for machinery, setup, land development, and operational expenses.
• 🟩 Includes support for biomass pellet production units as well.
• 🟩 Repayment period up to 10 years with 6–12 months moratorium.

✅ Canara Bank – Sustainable Energy Finance

• 🟩 Offers project loans under green energy initiatives.
• 🟩 Supports co-generation and bio-energy projects with flexible terms.
• 🟩 Loans may be linked with MNRE subsidy schemes.
• 🟩 Emphasis on rural and agro-based biomass plants.

✅ REC Limited (Rural Electrification Corporation)

• 🟩 Offers loans for decentralized renewable energy systems, including biomass gasification and combustion plants.
• 🟩 Targets small to medium-sized renewable projects.
• 🟩 Repayment tenures up to 15 years depending on project size.

📋 Eligibility Criteria for Biomass Plant Loans

To qualify for bank loans, the biomass plant must meet the following basic eligibility criteria:

• 🟨 Registered company, LLP, cooperative society, or proprietary unit
• 🟨 Valid pollution clearance and other state/national approvals
• 🟨 Availability of land and biomass fuel supply agreements
• 🟨 Proven business model or existing operational track record
• 🟨 Minimum project cost as per bank guidelines (typically ₹50 Lakhs and above)
• 🟨 Viable project feasibility report and financial projections

📁 Required Documents for Loan Application

A complete and well-prepared loan proposal increases your chances of approval. Here’s what you’ll need:

• 📄 Detailed Project Report (DPR) with technical & financial feasibility
• 📄 Company registration and PAN/GST certificates
• 📄 Balance sheets and income tax returns (last 3 years)
• 📄 Land ownership/lease documents
• 📄 Machinery quotations and vendor details
• 📄 Environmental clearance (if applicable)
• 📄 Power purchase agreement (PPA) or off-take agreement
• 📄 Promoter’s KYC, credit rating, and experience profile

🧾 Loan Application Process for Biomass Projects

Here’s a simplified step-by-step process to apply for biomass plant loans:

1. 🔍 Project Planning
   Prepare a comprehensive DPR and assess fund requirements.
2. 📝 Bank Identification
   Choose a bank that aligns with your project type, location, and scale.
3. 📑 Loan Proposal Submission
   Submit loan application with DPR, financials, and supporting documents.
4. 🧮 Appraisal & Due Diligence
   Bank reviews project viability, promoter credibility, and collateral.
5. ✅ Sanction & Agreement
   Once approved, bank issues sanction letter and signs loan agreement.
6. 💰 Disbursement of Funds
   Disbursement in phases based on project milestones (civil work, machinery, etc.).
7. 🔁 Repayment & Monitoring
   Regular EMI repayment and project performance review by bank.

🧩 Government Schemes That Can Support Biomass Loans

• 📌 MNRE Capital Subsidy Scheme for Biomass Projects
• 📌 PM Kusum Scheme – Biomass-based Decentralized Power
• 📌 Subsidy for Biomass Briquette & Pellet Plants
• 📌 Accelerated Depreciation Benefits (Income Tax)
• 📌 Viability Gap Funding (VGF) under specific state policies

💼 Conclusion: Choose the Right Financing Partner

Choosing the right financial institution is key to ensuring smooth project execution and long-term success of your biomass plant. Leading banks like SBI, PNB, and IREDA are actively supporting green energy initiatives. With a strong project report, clear documentation, and understanding of the loan process, you can secure financing efficiently and contribute to India’s sustainable energy transition.