IREDA Grading

In order to promote, develop and extend financial assistance, the Indian Renewable Energy Development Agency Limited (IREDA) has introduced the requirement of external credit rating for customers seeking/availing credit facilities in the form of long-term loan from IREDA. The prospective borrowers have a mandatory requirement to obtain credit rating under "IREDA Credit Rating Model for Renewable Energy Financing” (ICRM) - developed by external credit rating agencies registered with Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI). SMERA Ratings Limited is a full service credit rating agency empanelled with IREDA to undertake ratings under ICRM for financing new and renewable energy companies.

ICRM incorporates standardised criteria and parameters aimed at ensuring consistency and objectivity in evaluation by all external credit rating agencies. Prospective borrowers are free to obtain the rating from any credit rating agency registered with RBI and SEBI.

The IREDA grading criteria involves an assessment of the various risk parameters typically associated with the projects. Grading would be carried out with respect to overall project risk evaluation and sponsor risk evaluation. The parameters finalised by IREDA and all other credit rating agencies for evaluation under ICRM are as follows:

  • Sponsor Risk
  • Funding and Financial Risk
  • Permitting Risk
  • Execution Risk
  • Operating Risk
  • Generation/Fuel Availability Risk
  • Offtake/Counterparty Credit Risk

Grading Scale

Rating Definition
Grade 1 Excellent ability to repay IREDA debt as per terms
Grade 2 Very good ability to repay IREDA debt as per terms
Grade 3 Good ability to repay IREDA debt as per terms
Grade 4 Satisfactory ability to repay IREDA debt as per terms
Grade 5 Adequate ability to repay IREDA debt as per terms
Grade 6 Moderate ability to repay IREDA debt as per terms
Grade 7 Weak ability to repay IREDA debt as per terms
Grade 8 Very weak ability to repay IREDA debt as per terms
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