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Ashden Awards Case Study | A G Bank, India | Summary

Case study summary Aryavart Gramin Bank, India

2008 Ashden Award

The Aryvart Gramin Bank is a regional rural bank, which provides banking facilities in rural areas of Uttar Pradesh.

India statistics 2004/5


(U N D P )

G D P:US$736/year per person

CO2 emission: 1.2 tonnes/year per person 80% of people live on less than US$2/ day Many rural areas of Uttar Pradesh have no grid electricity and even where the grid is available there are frequent power cuts. The 2008 Ashden Award to the Aryavart Gramin Bank highlighted the significant contribution which the banking sector can make in bringing solar photovoltaic (P V )electricity to rural families. Bank finances two standard solar homes systems (SH S):35 Wp of P V with two fluorescent lights and a socket, and 70 Wp with four lights and a socket. Systems cost US$340 and US$680 respectively, including installation and one year of service. Solar loans provided to only to existing Aryavart Gramin Bank customers with a track record of reliable credit repayment. Customers make a 20% down payment, and loan for remaining 80% is paid back over five years. Repayments cost about the same as kerosene for lighting. Aryavart Gramin Bank branches promote SHS by holding credit camps in villages, where speakers demonstrate the system and explain how the financing works. 1,000 or more customers may sign up for solar loans at each camp. Business facilitators trained in system installation, maintenance and repair are paid to monthly fee to keep check on 100 SHS each. By April 2008, 10,103 customers had signed up for solar loans, and 8,007 families had been supplied with SHS, benefiting over 40,000 people. Each SHS saves about 100 litres/year of kerosene, thus systems installed to date avoid emissions of about 1,900 tonnes/year CO2. Students can study longer with solar lighting and neighbours can socialise more. Rural families can work in the evenings and earn more, which is particularly useful to women. Aryavart Gramin Bank branches also use PV-powered backup power during mains power cuts. 44% of people lack grid electricity Location

Asia
With the kerosene light, I had less time to study, as my eyes became strained. Now with solar light, I can devote much more time to stu dy and I get better ma rks. Binu Gupta, post graduate student

Update 2008 Ashden Award used to set up service centres, train and equip more business facilitators, and fund bonuses for staff in the branch which performed best in SHS sales. Aryavart Gramin Bank has signed a six-year carbon finance agreement, which will reduce SHS costs and strength en after-sales service. By December 2009, over 20,000 more SHS had been financed, bringing total to 28,214. Financing for larger P V systems also started The Aryavart Gramin Bank was established in 2006 from the merger of three smaller rural banks. In 2009 it had nearly 300 branches in rural areas of Uttar Pradesh and customer deposits worth US$ 560 million.

A G Bank staff with an array of solar panels

Contact Aryavart Gramin Bank Charan Singh agb_ho@ yaho o.co.in ww w.aryavar t-rrb.com

info@ashd enawards.o rg ww w.ashd enawards.o rg/ winn ers/ agbank08


Document last updated January 2010

Ashden Awards Case Study | A G Bank, India

Case study Aryavart Gramin Bank, India

Background Uttar Pradesh is one of the poorer states in India. For centuries, most people have been subsis tence farmers, and farms have become smaller as the land is divided between children. Many rural areas have no grid electricity, and even where the grid is available there are frequent power cuts. The Aryavart Gramin Bank operates in six districts of UP. It is one of a network of regional rural banks, set up by the Government of India to make banking facilities available in remote rural areas, and to provide small loans to farmers and other rural people. Having installed solar systems at five of its own branches to provide back-up power during mains power cuts, the Aryavart Gramin Bank decided to initiate a major programme to provide loans for its customers, so that they could purchase solar home systems (SHS)for lighting.

The organisation The Aryavart Gramin Bank was established in 2006 from the merger of three smaller Regional Rural (Gramin) banks. In 2009, it had nearly 300 branches in the rural areas of Uttar Pradesh, 230 of which provide solar loans, and held customer deposits worth US$ 560 million (Rs 23 billion). The technology How does it wo rk? An SHS consists of a photovoltaic (P V )module, which generates electricity from sunlight; a rechargeable battery, which stores electricity so that it can be used during both day and night; a charge controller, which prevents the battery from being over-charged or deepdischarged; fluorescent lamps; wiring and fixtures. Systems should provide lighting for four hours per day, with autonomy of three days (i.e. continue to supply power for two dull days after one sunny day) - although in practice up to eight hours of light is often possible. The systems can also support a mobile phone charger, a D C fan and/or a black and white TV. How much does it cost and how do users pay? US$1 = Rs 40 (Indian Rupees) [April 2008] The Aryavart Gramin Bank has negotiated a bulk supply deal with Tata BP Solar, so that a Venus I system costs the customer US$340 (Rs 13,520) and a Venus II US$680 (Rs 27,040), including installation. The bank supplies SHS only to its own Kisan (farmer) Credit Card (KC C)customers, who have an established track record for reliable credit repayment. KC C customers pay US$63 (Rs 2,520) up front for a Venus I SH S and are provided a loan of US$275 (Rs 11,000), repaid in instalments of US$6 (Rs 245) over five years. For the Venus II package the down payment is US$126 (Rs 5,040) and the instalments are US$12 (Rs 490) per month. The repayments are deposited through the customers existing bank account, and the branch manager is responsible for keeping a check on payments. No subsidies are involved. The KC C is a loan scheme offered to farmers by all rural banks in India. Under the scheme, a loan limit is worked out for every farmer borrower for a period of three years, based on the area of the farm, the proportion used for different crops, and independently-assessed cost and yields for each crop in the particular district. The farmer is then able to withdraw up to the loan limit at any time. The Aryavart Gramin Banks KC C scheme is currently used by 293,000 farmers.

AG Bank hold credit camps to inform people about the potential of solar and how it can be financed.

The technology in more detail The Aryavart Gramin Bank programme supplies two sizes of SHS. The more common Venus I package has a 35 Wp PV module; a 12 V, 40Ah tubular lead acid battery; two 9 W compact fluorescent lamps (C FLs) which include reflectors to enhance the light output; a charge controller and a mounting assembly for the module. This is larger than the basic systems offered by many N GOsin India, because it was thought that people would really benefit from the extra power. The larger Venus II package has a 70 Wp PV module; a 12 V 110Ah battery; four 9W CFLs;and the charge controller and mounting assembly. The PV modules are made from polycrystalline silicon and manufactured in Bangalore by Tata BP Solar. The batteries, charge controllers and CFLsare all produced in India by various manufacturers under contract to Tata BP Solar. The systems are installed either by qualified mechanics who are part of the local Tata BP Solar network, or by business facilitators trained by the Aryavart Gramin Bank. The PV modules are mounted on the roof of the house, sometimes fixed in such a way they moved indoors at night because of the fear of theft.

Ashden Awards Case Study | A G Bank, India

To promote the idea of the SHS, the Aryavart Gramin Bank branches hold credit camps in villages. Speakers from the bank and solar industry demonstrate the SHS and explain how it works. They also explain the details of the finance package, and invite participants to sign the contract agreement for a SHS. Both the Aryavart Gramin Bank and Tata BP Solar keep detailed records of all installations. Solar loans are also offered to womens self-help groups. For example a group of three of four women may apply for a loan for a SHS so that they can develop a handicraft business. How is it manufactured, promoted and maintained? Tata BP Solar manufactures all products to recognised international standards since much of its production is exported. It provides a ten year warranty on the PV modules. The batteries last about four to five years, provided they are properly used, but overloading a battery will shorten its life. PV systems need checks and occasional maintenance, even if they are manufactured and installed to high standards. The Aryavart Gramin Bank branch managers identify and engage young people with reasonab le education in each village to become parttime business facilitators. These facilitators are trained by the local Tata BP Solar dealer in system installation, maintenance and repair, and the company provides them with a basic tool kit and a mobile phone. Each facilitator is allocated 100 SHS customers, and helps the Tata BP Solar engineer to install their systems. The facilitator then trains the customer in the use of the system, answers any questions, and is available to solve basic problems. If any more serious problems arise, or spare parts are needed, then the facilitator can contact the local Tata BP Solar dealers. Facilitators are each paid a fixed fee of US$13 (Rs 500) per month, with the incentive of a US$100 (Rs 4,000) bonus at the end of the year if all their systems are working well. A facilitator can earn a further US$3 (Rs 100) for assisting a dealer with the installation of an SHS.

each as a result of the PV lighting.

Benefits By April 2008, 10,103 customers had signed up for solar loans, and 8,007 families had already been supplied with SHS, benefiting over 40,000 people. Environmental benefits The replacement of kerosene for P V reduces the emission of greenhouse gases. A typical household using eight litres/month of kerosene would have produced about 240 kg/year CO2. Thus the 8,007 systems installed up until April 2008 saved about 1,900 tonnes/ year CO2. Social benefits Solar lighting enables school and college-going children to study for longer and in brighter light, without the fumes and fire-risk of kerosene. Group study sessions are organised in schools, and often pupils do homework and examination preparation together in the school by solar light. Improved lighting has made it easier for people to have more social interaction. Neighbours visit each other more often and enjoy watching TV together, especially cricket. People have started pooling solar lights with their neighbours when organising social functions like marriages, to save on the cost of hiring diesel generators. Economic and employment benefits Previously most people used kerosene lamps, with households consuming on average eight litres/month of kerosene, which cost them up to US$7 (Rs 280) per month in rural areas. The monthly repayments on a 35 Wp system are about US$6 (IRs 240) including interest. Many SHS owners are paying less than before for a far better service. Solar home systems have enabled people to work in the evenings and earn more, which is particularly useful to women. The main cottage industry in the area is fine embroidery (Chikan work), for which bright light is a real benefit. One family of nine female tailors and embroiderers has seen their earnings increase by about US$11 (Rs 450) per month

I feel its great with the amount of light after dusk. The children stu dy and its made our life more healt hy as I can cook prope rly in the house and keep things tidy and clean. Santi Bibi

One of the facilitators trained byTata BP Solar to train customers to use systems and help with any problems.

A solar dealer with solar P V panel and lantern.

My neighbours like to come to sit around the light at night to talk and watch TV. Before, we did not open the door at night, because we could not see who was there. I was worried about the pollution from kerosene; the solar light is a miracle. M r Latshri Ragughu Singh, Banki village

Ashden Awards Case Study | A G Bank, India

Potential for growth and replication The Aryavart Gramin Bank finance scheme has been very successful. Credit camps sign up more customers than they targeted, and customers of other banks sometimes come in the hope that they might get an SHS loan. There is potential for using this type of finance scheme to make solar PV mainstream in rural areas, using the national Gramin bank network. Update: what happened next? The Aryavart Gramin Bank used part of the 2008 Ashden Award funds to set up ten service centres, to provide after-sales service for SHS customers. Funds were also used to train more business facilitators, and provide them with the basic tools for their work. The bank has provided continuing training for branch staff, so that they can provide information to customers on the technology and benefits of SHS, as well as the finance package. Part of the Awards funded an incentive programme, which gave cash bonuses to the staff in the branch which performed best in SHS sales The bank has signed a six-year carbon finance agreement with US-based Micro Energy Credits. The carbon finance will enable the cost of SHS to be reduced, and the after sales service to be strength ened. By December 2009, over 20,000 more SHS had been financed by the Aryavart Gramin Bank, bringing total sales to 28,214. The bank has also started providing finance for larger PV systems, to replace diesel generators.

I used to use the old kerosene light before. Now with the solar light I can work longer and get more income, as business has flourished. The kerosene lamp affected my eyes. Ganesh Prasad, tailor

Contact details Mr. Charan Singh CEO, Aryavart Gramin Bank A-2/46 Vijay Khand Gomti Nagar Lucknow Uttar Pradesh India agb_ho@ yaho o.co.in ww w.aryavar t-rrb.com

Pharmacy lit by solar.

We are able to do chikkan (embroidery) all night now we have the light. We can also use the sewing machines. We earn IRs 400 to 500 extra. Mrs Siertaz A li,tailor
This report is based on information provided to the Ashden Awards judges by the Aryavart Gramin Bank, and findings from a visit by one of the judging team to see its work in India. The Ashden Awards have taken all reasonab le care to ensure that the information contained in this report is full and accurate. However, no warranty or representation is given byThe Ashden Awards that the information contained in this report is free from errors or inaccuracies. To the extent permitted by applicable laws, The Ashden Awards accept no liability for any direct, indirect or consequential damages however caused resulting from reliance on the information contained in this report.

Last updated: January 2010

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