Green NBFCs Show that Financial Profitability and Environmental Purpose Can Coexist Effectively

Ecofy, a green-focused NBFC,has entered a series of partnerships with electric vehicle manufacturers and battery makers. The latest is a tie-up with TVS motors for financing EV 3-wheelers.Earlier this year Ecofy, co-founded by industry leaders Rajashree Nambiar and Govind Shankaranaraynan, raised Rs 90 crore in an equity round, backed by Eversource Capital.

The company offers solutions tailored to finance green assets like EVs, roof-top solar installations and energy efficiency to support climate positive choices. Outlook Business buttonholed Nambiar to understand the company’s strategies in the face of a predicted slowdown in growth in NBFC lending, and why she feels green NBFCs are here to stay. Excerpts from the interview  

Q.Why did Ecofy enter the green NBFC space?

A.We embarked upon green financing with a well-defined goal which was to address the pressing last-mile gap in climate funding. We are backed by the Green Growth Equity Fund, India's largest climate financing fund, which provides the necessary resources and foundation to help us impact sustainable financing on a national scale. My co-founder Govind Shankar Narayanan and I realised that while capital was available at the institutional level, it was not reaching end-borrowers.

We built Ecofy as a tech-driven NBFC, exclusively focused on green assets by welding our retail expertise with digital innovation. Since the disbursement of our first loan in December 2022 after its official launch, Ecofy has consistently gone beyond merely offering loans, and emerged as an entity committed to creating a digital ecosystem that mainstreams sustainable choices.

Through our platform, we aim to simplify the journey to sustainable living and prove that financial profitability and environmental purpose can coexist effectively.

Q.How do you see the role of green NBFCs in India's green transition journey?

A.Green financing is rapidly gaining traction in India, a country that faces both the urgency of climate change, and the need for sustainable economic growth. The Reserve Bank of India estimates that an investment of Rs 85.6 trillion is needed by 2030 to ensure that industries comply with climate-change regulations. Furthermore, reaching India's net zero emission goals by 2070 would entail an estimated investment of US $ 10 trillion. Critical sectors like food, mobility and energy contribute significantly to carbon emissions and are essential to India's green transition. Green NBFCs are well-positioned to assess the long-term viability of these assets, keeping in mind aspects like battery life, resale potential and refinancing options. Sustainable lending is crucial, as it supports economic growth while addressing environmental concerns, making green NBFCs indispensable to India's climate goals. 

Q.What makes you so optimistic about the future for NBFCs in India’s climate finance landscape?
A.It is extremely bright with sustainability taking centre stage in economic decisions and climate finance shifting gears from being a niche segment to becoming a core focus for all NBFCs. This transformation is being propelled both by increasing market pulls and regulatory pressures. The current climate financing gap represents both a challenge and an opportunity for NBFCs. Encouragingly, both equity and debt capital are available for NBFCs that demonstrate strong governance, resilient business models, and quality management. For these institutions, the key to success lies in developing innovative, market-driven financial products that address specific needs while upholding high standards in risk management.

Q.A recent ICRA report predicted slowdown in growth of NBFC lending. How is Ecofy preparing to face the slowdown in 2025?

A.Our growth figures give us justified reasons for optimism. In just two years Ecofy has become India's first diversified retail green lender serving over 43,000 customers with an average cheque size of Rs 2 lakh. Every loan is fully secured, and its end-use is closely monitored to ensure accountability and impact. In 2024 we invested in significant upgrades to our digital platform, which have streamlined loan processing efficiency, reduced turnaround times and enhanced customer satisfaction. 

We now have a footprint across 14 states. Our financing efforts have led to a reduction of more than 16,352 tonnes in carbon emissions. Going forward, our focus will be on creating scalable, replicable and sustainable financing solutions that fulfil India's developmental needs. Our success hinges on our capacity to innovate in financial products, strengthen institutional frameworks, and foster a supportive environment for green investments. These priorities will keep us resilient against any industry headwinds. 

Q.How are you positioning yourself differently in a cluttered market in the green financial sector? 

A.Ecofy's competitive edge lies in its laser-focused approach to green financing. Instead of diversifying across multiple areas, we concentrate on selecting niches within the sustainable finance sector allowing us to cultivate deep expertise in specific areas like electric vehicle financing and rooftop solar solutions. We have invested considerable time and effort in understanding the entire ecosystem and have built strategic partnerships with manufacturers, dealers and technology providers.

 Our innovative product line-up encompasses solutions like Battery-as-a-Service, specialised leasing and financing options, designed to address specific customer pain points. These are not just financial products - they are comprehensive solutions core to the entire life cycle of green assets.