Partial Risk Sharing Facility(PRSF)– FAQs

  1. What is the need of PRSFPRSF is aimed at unlocking significant private sector investment potential and catalyzing an energy savings performance contracting market in India by encouraging increased investment in energy efficiency. It is aimed at empowering ESCOs to become practive.
  1. What is PRSF and its objective?

PRSFprovides partial credit guarantees to Participating Financial Institutions (PFIs) to cover a portion of default risk faced by them in extending loans to energy efficiency (EE) projects implemented through Energy Service Companies (ESCOs) under Performance Contracting route. This facility is supported by Global Environment Facility (GEF) and Clean Technology Fund (CTF) through the World Bank.

The objective of the PRSF is to transform the energy efficiency market in India by promoting increased level of EE investments, particularly through performance contracting delivered through ESCOs.

  1. What is the role of SIDBI in PRSF?

i)Project Executing Agency (PEA) responsible for operating the project including issuing guarantee for eligible EE projects,

ii)Developing ESCO market in India along with Energy Efficiency Services Limited (EESL).

  1. What are the basic eligibility criteria for a project to be guaranteed under PRSF?

a)Project to be implemented through an ESCO based on ESPC with the host (end beneficiary);

b)ESCO should be empanelled with BEE;

c)Project should be implemented at a) MSME, b) Large industries (excluding thermal power plants), c) Commercial buildings and d) Municipalities ;

d)Borrower can either be an ESCO or Host depending upon the type of ESCO model. However, irrespective of that, borrower should be classified as a micro or small enterprise, as per MSMED Act, 2006

  1. What is an ESCO? How can you identify it?

ESCO means a firm / company engaged in providing technical consultancy & other support / solutions with the objective of achieving savings in energy through an underlying Energy Saving Performance Contracts (ESPC).

ESCOs are being empanelled by Bureau of Energy Efficiency (BEE), Govt. of India. List of BEE empanelled ESCOs are available at

  1. I am an ESCO with several years of experience in the sector; however I am not empanelled with BEE? How can I participate under PRSF?

Non-BEE empanelled ESCOs are also eligible to participate under PRSF provided they undergo a grading process by CRISIL, CARE and ICRA which undertake the grading of ESCOs for BEE registration. Such rating is subject to approval of the PEA.

  1. What is an ESPC? What are the main models of ESPC?

Energy Savings Performance Contract (ESPC) means a contract between the Host (project beneficiary) and ESCO for implementation of the project, benefiting the projectbeneficiary through energy savings.

There are two main models for energy performance contract: the “shared savings” model and the “guaranteed savings” model.

Under a shared savings structure, ESCO finances the project, usually by borrowing money. ESCO assumes not only the performance risk, but also the financial risk (including the underlying customer credit risk).

Under a guaranteed savings structure, the customer finances the project in return for a guarantee from the ESCO that the project’s energy savings will cover the customer’s debt service.

Apart from the above models, other variants are also possible.

  1. What kind of loans can be guaranteed under PRSF?
  • For Participating Financial Institutions (PFIs), loans sanctioned to MSMEs failing within micro and small categories of MSMED act shall only be covered.
  • Minimum 75% of the guaranteed loan should be towards the cost of the investments contributing to energy savings.
  • Project should not be guaranteed by any other Government scheme.
  • Projects involving only substitution of conventional energy with off-grid or captive renewable energy source will not be covered.
  • EE projects in coal based thermal power plants are not eligible.
  1. What is the time duration of the PRSF project? What is the guarantee tenure for individual EE loan?

The project duration shall be 15 years consisting of initial period of 10 years and a follow-on period of 5 years.

The maximum tenure of any Guarantee issued under PRSF will be 5 (five) years (or such other period as may be decided by PEA) from the date of first disbursement of the guaranteed loan or till the last date of the operational period of PRSF, whichever is earlier.

  1. How can an MSME get loan under PRSF? (Or) How can one access the fund available in PRSF?

PRSF is not a loan / subsidy scheme. It is not accessible for any individual project developers or ESCO directly. It is a partial guarantee scheme for EE loans extended by PFIs.

  1. Can the MSME Entrepreneurs / borrowers approach PRSF directly to seek guarantee for the credits sanctioned by the Banks?

PRSF is available for loans extended by PFIs registered with PEA for implementation of EE projects. Therefore, MSME entrepreneurs need not to approach PEA for the guarantee.

  1. What is the extent of PRSF guarantee?

The extent of guarantee cover as a proportion to the guaranteed loan is up to 75%.

  1. What is the minimum and maximum loan amount that can be covered under PRSF? Is there any cumulative exposure limit for a single ESCO or a single Host under PRSF?

The minimum loan amount : Rs.10 Lakhs

The maximum amount :Rs. 15 Crore.

The amount of aggregate guarantees outstanding at any time in respect of projects involving a single Host or a single ESCO or a single group of companies shall not exceed INR 45 Crore. In case of category 5 ESCOs, this is limited to INR 40 Crore.

  1. Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution? If multiple lenders are involved in a single project, how will the guarantee coverage calculated?

No. It is not necessary that the required credit facility for the EE project is sourced from a single financial institution. Multiple lenders for a single project are also allowed. The guarantee coverage per project will still be limited to INR 15 Crore loan exposure.

  1. Can a credit facility of over INR 15 Crore be covered under PRSF?

Yes. However, the guarantee coverage will be limited to INR 15 crore loan exposure per project.

  1. What is the procedure for application of guarantee cover? When will the guarantee cover become effective?

After sanction of loan to eligible ESCO or Host for implementation of EE Projects, lender registered with PEA needs to submit the guarantee application form along with specified documents. Guarantee application format is available at

After intimation from PEA, the lender has to remit the required guarantee fee within 30 days of approval from the PEA. The guarantee shall come into force from the date of payment of guarantee fee to PEA.

  1. Whether the guarantee fee is a one-time fee?

No. The Guarantee Fee for the first year shall become payable by the lender to PEA within 30 days of the approval of Guarantee by PEA and thereafter on annual basis on loan outstanding , at the beginning of each financial year in advance, by April 30th of every year.

  1. Since the guarantee fee is paid up front on an annual basis, in case if the loan is closed during the year (say 6 months), whether the guarantee fee will be refunded for the remaining period?

No. Guarantee fee is non-refundable.

  1. Is there any time limit for disbursement of the PRSF guaranteed loan?

PRSF guarantee shall apply only to loan amounts disbursed within a period of 18 months from the date on which the guarantee has been approved. Guarantee for the remaining loan may be revalidated by PEA, at its discretion, upon receipt of fresh Guarantee Fee for the same.

  1. Whether the lender is allowed to take any other security along with PRSF coverage?

Yes. Lenders can take primary and collateral security as required.

  1. When the PRSF guarantee cover can be invoked?

PRSF guarantee cover can be invoked under two situations:

a)Loan becoming NPA

b)Loan restructuring without proceeding for legal recovery

  1. Whether standard ESPC format is insisted under PRSF?

Yes. However, during the early stages of PRSF program, adhoc agreements in different formats may be accepted provided the same covers the basic features / key principles of the ESPC in substance. However, these will be gradually phased out through use of standardized formats.

  1. Whether the guarantee will continue to be available in respect of a particular borrower if there is change in management of that borrower during the period the guarantee is in force?

The guarantee will continue to be available if the new promoters/management of such borrower meets/satisfies the conditions including that of maximum exposure limit, MSME status, etc., and continue to perform the existing activities of the borrower or undertake new activities which are otherwise eligible as EE Project under PRSF.

However, if the new promoter / management do not satisfy any of the norms of PRSF, the guarantee in respect of the credit facility shall be deemed to be terminated from the date of said transfer or assignment.

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