Enhancing India’s Readiness to Climate Finance

Enhancing India’s readiness to access and deliver international climate finance
4. Institutional delivery of
climate finance
Does the country have a
strong institutional structure
to deliver climate finance
through institutions that can
provide NIE type functions?
4.1 Are there one or more
institutions that deliver
international climate finance?
India has DFIs with good experience of accessing climate finance but experience is still limited
in delivering finance to specific sectors and geographies
• Financial institutions such as NABARD, IREDA, SIDBI, PFC, IDBI, IDFC as well as institutions
such as BEE have strong experience in accessing & delivering international climate
finance for EE, RE and resource efficiency projects.
• These institutions have acted as executing agencies for various international funds, or
have successfully used line of credits from various bilateral funding sources.
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NIE functions include:
Project development
Proposal writing and fund
accessing
Project selection &
technical appraisals
Fund management
Adhering to fiduciary
standards
Risk management and
mitigation
Ensuring environmental &
social safeguards
Programme management
Project delivery and
project management
Monitoring & evaluation
4.2 Do institutions that can
provide NIE type functions
easily meet international
accreditation requirements
and funds’ fiduciary,
environmental and social
standards?
• However to deal with larger quantum of international finance, additional sectors, and to
meet strong MRV requirements, capacities need to be enhanced for these institutions.
Areas that show room for improvement include technology appraisal, due-diligence,
fiduciary responsibilities, environmental and social impact assessments, and vulnerability
assessment.
DFIs have experience deploying climate finance, but this is often limited to specific sectors
(and in some cases limited in scale and volume)
• SIDBI, IREDA, PFC, IDFC etc. have experience in delivering mitigation finance.
• NABARD, as the new Adaptation Fund NIE, has started delivering adaptation finance.
• Rural banks and micro-finance institutions provide finances to rural areas; these
channels could be used for adaptation finance as well.
Indian institutions have some capacity to meet fiduciary, environmental and social standards,
but additional capacity-building is required
• NIEs have struggled to meet some international standards, particularly environmental
and social standards and MRV requirements.
• Additional capacity building will be required to improve capacity in these institutions.
NABARD has been accredited as the NIE for Adaptation Fund
• NABARD has been accredited as a direct access NIE for the Adaptation Fund.
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• The AF has recently approved 3 projects in India, which NABARD will manage.
4.3 Do institutions that can
provide NIE type functions
have experience delivering
complex climate-related
programming, including
projects that involve private
DFIs have delivered some climate related programmes that have leveraged private finance,
but capacity to deliver more complex projects involving multiple financing instruments, scale
and institutions is limited
• India has strong experience & capacity in specific sectors such as RE and EE.
• However there is a need to develop institutional capacities which could build on
programmatic approach of financing which focus on designing and implementing
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Ref: Ricardo-AEA/R/ED59216/Final Report
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