In a significant move towards promoting electric vehicles (EVs) in India, Axis Bank, a leading private sector lender, has extended a loan guarantee of Rs 1 billion to Muthoot Capital. This partnership is made possible with the support of GuarantCo, part of the Private Infrastructure Development Group (PIDG). The goal is to enable Muthoot Capital to provide loans to customers in rural and non-metro areas for purchasing electric two-wheelers.
Promoting Sustainable Transport Solutions
Rajiv Anand, the Deputy Managing Director of Axis Bank, emphasized the importance of this initiative. He noted that Axis Bank is focused on reducing emissions, improving air quality, and offering affordable transportation solutions to people across India.
“We have expanded our partnerships with EV dealers, manufacturers, and other stakeholders. This collaboration supports the development of green infrastructure and aligns with our broader vision of a sustainable future for all,” said Anand.
GuarantCo’s Role in the Partnership
GuarantCo has played a key role in this collaboration by providing a 65% credit guarantee to Axis Bank. This transaction is part of a larger $200 million EV framework agreement between Axis Bank and GuarantCo. The framework aims to mobilize funds between $300 and $400 million to support India’s growing e-mobility ecosystem.
Focus on Rural and Non-Metro Regions
The primary focus of this collaboration with Muthoot Capital is to provide financing solutions for customers in rural and non-metro areas. These regions, home to lower-income populations, have often been underserved when it comes to access to affordable transport options.
Mathews Markose, the Chief Executive Officer of Muthoot Capital, expressed excitement about the partnership. “This funding will allow us to offer innovative financing options to make electric vehicles more accessible and affordable. Our goal is to empower more people to own electric two-wheelers and contribute to the growing EV market.” Muthoot Capital aims to grow its electric vehicle loan portfolio by Rs 200 crore during FY25.
Impact on Local Businesses
This initiative is expected to benefit various businesses operating in the EV supply chain, including equipment manufacturers, vehicle dealers, and insurers. By providing more affordable financing options for EV purchases, it will also positively impact local businesses and the overall e-mobility ecosystem.
Building on Previous Success
This is the third transaction between Axis Bank and GuarantCo under the EV framework agreement. In December 2023, they enabled an Rs 2.5 billion loan to Vivriti Capital to support its e-mobility expansion strategy. They also extended a Rs 1 billion loan to Everest Fleet for the purchase of electric taxis.
GuarantCo’s CEO, Layth Al-Falaki, highlighted the significance of this latest transaction: “This is the first under the framework that covers the demand side of the EV business, allowing customers to purchase electric vehicles. We hope this will catalyze further deployment of EVs in India.”
Conclusion
The partnership between Axis Bank, Muthoot Capital, and GuarantCo marks a significant step towards accelerating the adoption of electric vehicles in India, especially in underserved rural areas. With a focus on making EVs more accessible, this collaboration aligns with India’s broader climate action goals and the growing demand for sustainable transport solutions.
