According to India Ratings estimates, modern data centers could cost between ₹50 and 70 crore per MW | Photo credits: Getty Images/iStockphoto
Speak with business lineAccording to banks and credit rating agencies, data centers, in addition to renewable energy, now represent a significant part of the infrastructure credit pipeline for banks.
Rajneesh Karnatak, MD and CEO, Bank of India, said the bank is seeing increasing lending proposals in sectors such as data centres, warehousing, solar PV modules and others.
Indian Bank MD & CEO Binod Kumar recently shared this business line that the bank’s ₹60,000-crore corporate credit pipeline is seeing strong growth, with data center operators and power transmission companies being the key drivers.
In February last year, State Bank of India (SBI) paid out ₹1,357 crore in long-term secured debt to Yotta Data Services, the data center arm of Hiranandani Group.
In April 2024, Adani Connex, a joint venture between Adani Enterprises and private data center operator EdgeConneX, secured loans of up to $1.44 billion from Standard Chartered Bank, Sumitomo Mitsui Banking Corporation and ING Bank NV, among others.
The growing need for debt is necessary because of the enormous investment costs for these DC projects. According to India Ratings estimates, modern data centers could cost between ₹50 and 70 crore per MW.
According to the DRHP, Sify Infinit Spaces, the data center subsidiary of Sify Technologies, reported borrowings of ₹2,097 crore as of March 2025, up from ₹1,708 crore at the end of FY24.
Meanwhile, borrowings for Bharti Airtel’s data center unit Nxtra stood at ₹1,243 crore as of March 2025, almost doubling from ₹677 crore YoY.
Abhishek Lahoti, deputy vice president and sector head, ICRA Ltd, believes such debt-heavy balance sheets are typical of the sector.
“The typical financing structure for DC projects includes approximately 60 to 70 percent debt and 30 to 40 percent promoter equity. Once the DCs reach lease milestones, these loans are generally refinanced into lease rental discount (LRD) or term loans, with extended terms of 10 to 15 years,” he said. “More than 65 percent of costs associated with data centers are in technology systems that are only installed after firm lease commitments. This means that large investments are driven by confirmed demand, giving lenders a clearer view of cash flows and reducing project risk,” he added.
Even companies that emphasize equity-driven early expansion expect to eventually rely on debt financing to finance their projects.
“At this stage, our projects are primarily financed with equity, both from QIP revenues and internal accruals. As the portfolio grows, we expect to transition to a balanced mix of debt and equity to improve overall project returns,” said Ankit Saraiya, CEO of Techno Digital, the data center subsidiary of Techno Electric & Engineering.
(With inputs from Piyush Shukla and Sindhu Hariharan)
Published on November 25, 2025
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