| Project Detail |
To increase the penetration of low-carbon transportation vehicles in India.
DESCRIPTION
The Project contemplates providing USD100 million or equivalent in INR financing to Shriram Finance Limited (SFL) to support and expand its lending to new energy efficient vehicle ownerships in India.
The Borrower, SFL, is a non-banking finance company that primarily provides commercial vehicle loans for trucks, passenger vehicles, tractors and farm equipment, and construction equipment in India.
ENVIRONMENTAL AND SOCIAL INFORMATION
AIIB’s Environmental and Social Policy (ESP) is applicable to this on-lending facility. The Project has been placed in Category FI, because the financing structure involves the provision of funds through an FI, whereby AIIB delegates to SFL the decision-making on the use of AIIB’s funds in so far as the financing meets agreed upon conditions.
SFL, through implementation of its Business Responsible Policy and other related policies, is the Environmental and Social Management System (ESMS) that it uses to manage ES risks and impacts of the Project. These policies are disclosed by the company on its website.
AIIB has reviewed the ESMS and confirmed that it is aligned with AIIB’s Environmental and Social Policy (ESP), including applicable Environmental and Social Standards (ESSs) and the Environmental and Social Exclusion List (ESEL). The financing of coal mining, coal transportation or coal-fired power plants as well as infrastructure exclusively dedicated to support any of these activities will be excluded.
The Project is expected to have minimal adverse environmental impacts as proceeds to SFL will be used only for on-lending to individuals and companies to acquire commercial vehicles, which comprise of (i) electric vehicles and CNG/LPG (at least 75% of on-lending proceeds) and (ii) BS-VI certified vehicles used in infrastructure development activities (at most 25% of on-lending proceeds). SFL itself thus does not manufacture or sell vehicles. No land acquisition or physical or economic displacement is expected from the activities of the individual borrowers. The Project is expected to have minimal adverse social impacts given it is not involved in high-risk activities that involve civil works, capital expansion, land acquisition, nor impacts to Indigenous Peoples. SFL adheres to standard fair lending and debt collection practices with respect to borrowers in policies outlined in its ESMS.
Regarding employment opportunities, SFL’s Policy on well-being of employees stipulates that the company provides employment opportunities based on merit, and irrespective of their gender and other characteristics such as caste, creed, gender, race, religion, language and disability or sexual orientation. SFL’s Policy on well-being of employees also provide flexibility of work-life balance options for women.
SFL maintains an external Grievance Redress Mechanism (GRM) on its website for stakeholders to make complaints, suggestions, and inquiries to the company. SFL also maintains an internal GRM to handle grievances filed by its contracted employees. |
