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IDBI signs MOU with IFC for co-operation in CDM projects

Industrial Development Bank of India Ltd (IDBI) has entered into a non-exclusive Memorandum of Understanding (MoU) with International Finance Corporation (IFC) to jointly assist domestic companies undertaking Clean Development Mechanism (CDM) projects which reduce carbon emissions in the environment.

The two financial intermediaries will also help companies realize the value of the carbon credits, arising from the implementation of CDM, by selling the credits in the global markets.

Domestic companies planning to undertake CDM projects under the Kyoto protocol can now avail of one-stop solutions project identification, funding implementation of CDM projects, registration and verification, advisory services for trading certified emission reduction (CER) units - from the IDBI-IFC combine.

The IDBI -IFC combine will not only assist Indian companies, both large and small, which want to undertake CDM projects but also help boost their bottomline by selling the resultant CERs forward in the global markets. While the sale of CERs will give companies additional revenue, IDBI stands to gain in the form of additional fee income. Furthermore, IDBI, through this initiative, contributing towards furthering "green technology" in the country.

IFC has developed innovative products and value-added services that enable emerging market private sector clients to access global buyers of carbon credits. IDBI is currently working on some CDM projects in the textiles, steel, power, paper and sugar sectors. It expects to assist many more companies to implement CDM projects by the end of this financial year.

Further, IDBI is seeking to assist SMEs in implementing CDM projects in a big way. The bank plans to pool CERs generated by SMEs and sell them globally in market lots of 50,000 to 100,000 CER units. The move to aggregate CERs is significant as a typical SME in India can generate far lesser CERs annually than the international market lot.

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