India expects $500M AIIB loan for solar power projects in 2016

India expects $500M AIIB loan for solar power projects in 2016

India is hopeful of receiving the first loan issued by the newly formed Asian Infrastructure Investment Bank (AIIB) in the second half of the year.

The country is looking for funds on lower interest rates for its ambitious solar power project that intends to scale the capacity to 100 gigawatts by 2022.

• The loan amount is expected to be approximately $500 million. According to the report, interest on the loan would likely be around 2-2.5 percent, linked to LIBOR, for a term of 15 years. 

• LIBOR is a floating benchmark based on the rate at which commercial banks lend each other.

• India needs $100 billion for its ambitious solar power projects over next six to seven years. The country hopes to increase its solar power capacity 100 gigawatts, roughly 17 times higher than the existing 5,800 megawatts capacity.

• With an authorised capital of $100 billion, the AIIB is expected to start its operation in the second quarter of 2016 and lend up to $15 billion a year for the next half a decade.

India is the second biggest shareholder in the investment bank after China.