Ashden Awards for Sustainable Energy Blog: More Indian banks bring solar power to poor customers

Ben Dixon, Ashden Awards’ Programme Manager, recently visited Aryavart Gramin Bank in Lucknow, Uttar Pradesh, India. This bank won a 2008 Ashden Award for their programme of providing loans to rural customers wishing to buy solar home lighting systems:

I’m just back from a really exciting visit to Aryavart Gramin Bank in Lucknow. This forward-thinking rural bank is pioneering a system of affordable loans for poor rural customers that wish to purchase solar home lighting systems. The systems are supplied in partnership with TATA-BP Solar and they have rapidly scaled up to more than 20,000 loans agreed.

This programme is particularly exciting because it doesn’t involve any subsidy – the 5-year credit package means that repayments are equivalent to or less than a household’s energy bills when they use dim, toxic, and dangerous kerosene lanterns. This means the programme has great potential for replication through other rural banks and finance providers across India and elsewhere.

The good news is that since the profile of this programme was raised by its Ashden Award triumph in June 2008, India’s National Bank for Agriculture and Rural Development (NABARD) has issued a circular encouraging every rural bank to follow this model, including the following content:

“A UK based charitable trust that works on increasing the use of local sustainable energy worldwide has awarded the bank with prestigious “Ashden Awards”. The Award is an internationally recognised yardstick for excellence in the field of sustainable or green energy (www.ashdenawards.org). Shri NK Joshi, then Chairman of Aryavart Gramin Bank received the Award from Dr. Wangari Maathai, the 2004 Nobel Peace winner, at a ceremony held in London on 19/06/2008. Shri Joshi was congratulated by Prince Charles, Patron of Ashden Awards.

We therefore request you to make efforts to replicate the scheme in your area of operation without or with suitable modifications/changes as per the local requirements. NABARD would share 50% of the cost of installation up to a maximum of 20 demonstration units at important places. In addition, NABARD will extend support to the bank for conducting awareness campaigns and organising credit camps etc at Rs 1,000/- per campaign for a maximum of 20 programmes.”

At the request of NABARD, NK Joshi and NC Khulbe, the former and current Chairmen of Aryavart Gramin Bank, went to meet the Indian Finance Minister and the Deputy Governor of the Reserve Bank of India, and were given a special award to recognise the success of this programme (see photos below).

Previous and current Chairmen meet the Deputy Governor of the Reserve Bank of India

NK Joshi meets the Indian Finance Minister

I was also fortunate to visit the village of Gondwa, 55km from Lucknow, where 250 solar home systems have been financed so far by Aryavart Gramin Bank. Amazingly, this village has had electricity poles and lines for the last ten years, but no power has ever reached them.

We arrived in the evening to a tremendously warm reception from the village – who are clearly very enthusiastic about the opportunity to own a solar system. As it got dark, the impact of this work was particularly striking – the bright light from houses with solar power contrasted with the flickering orange kerosene candles that were barely lighting the rest of the village. We met with shopkeepers who were able to stay open later, women making money embroidering saris under solar lights, children happy to have bright light for their homework, and many other households with lights, mobile phone chargers, fans, TVs, radios and stereos all powered by solar electricity.

The Ashden Award funds will be used to help build the after-sales service system to make sure that any problems with solar systems are quickly fixed, to incentivise bank branches to continue roll-out of the programme, and to promote the programme further in new villages.