What is a solar panel loan in India?

A solar panel loan in India is a financing option that lets you install a rooftop solar system without paying the full cost upfront. Under the PM-Surya Ghar: Muft Bijli Yojana, collateral-free loans are available from nationalized banks at a concessional interest rate of repo-rate plus 50 bps, i.e., 5.75% per annum for the present, with a tenure of 10 years. This means you can borrow the amount needed for the system and repay it over a decade, while the system reduces your electricity bill from the first month.

The loan is designed to work alongside the central subsidy. You do not have to wait for the subsidy to be credited before paying the installer; the loan can cover the full system cost, and the subsidy amount is later credited to your account. This makes rooftop solar accessible even if you do not have the full amount saved.

How much does a rooftop solar system cost?

The cost of a rooftop solar system depends on its capacity. A 2 kW home solar system in India has a starting price range, with installation, of ₹1,75,000 to ₹2,13,000. A 3 kW solar system starting price in India, with installation, ranges between about Rs. 2.15 lakh and Rs. 2.47 lakh. These are indicative prices; the final quote from an installer may vary based on roof type, inverter brand, and other factors.

What subsidy is available under PM-Surya Ghar?

The PM-Surya Ghar: Muft Bijli Yojana provides a central financial assistance (CFA) that reduces the effective cost of your system. The scheme provides a CFA of 60% of system cost for 2 kW systems and 40% of additional system cost for systems between 2 to 3 kW capacity, capped at 3 kW; at current benchmark prices this means Rs 30,000 subsidy for 1 kW system, Rs 60,000 for 2 kW systems and Rs 78,000 for 3 kW systems or higher. This subsidy is credited to your bank account after the system is installed and the net meter is commissioned.

For example, if you install a 3 kW system costing ₹2,30,000, you can receive a subsidy of ₹78,000. Your loan can cover the full ₹2,30,000, and when the subsidy arrives, you can use it to prepay part of the loan or keep it as savings.

How do I apply for a solar panel loan and subsidy?

The process is integrated with the National Portal for Rooftop Solar. The households will apply for subsidy through the National Portal and will be able to select a suitable vendor for installing rooftop solar. Once you select a vendor, you can approach a nationalized bank for the loan. The bank will sanction the loan based on the system cost and your eligibility.

With all credentials entered correctly on the National Portal, the average time taken in processing the CFA is around 15 days after the redemption request made by the consumer. This means the subsidy is typically credited within about two weeks after you submit the request, provided all documents are in order.

What are the benefits of financing a solar system?

Financing a solar system allows you to start saving on electricity bills immediately. A 3 kW system will be able to generate more than 300 units a month on an average for a household. Through this scheme, the households will be able to save electricity bills as well as earn additional income through sale of surplus power to DISCOMs. The loan EMI is often comparable to the monthly savings on your electricity bill, making the system effectively self-financing over time.

The rise in demand is in line with the progression of summer conditions across the country, with electricity consumption witnessing a significant growth of 8.9% during the month of April 2026. As electricity tariffs increase, the savings from a solar system become more valuable, making the loan a practical investment.

What should I check before taking a solar loan?

Before taking a solar panel loan, compare the interest rate and processing fees from different banks. The concessional rate of 5.75% per annum is available from nationalized banks under the scheme, but private banks may offer different terms. Check the loan tenure, prepayment charges, and whether the bank requires any collateral. Under the scheme, the loan is collateral-free, but you should confirm this with the bank.

Also, verify the subsidy amount for your system size and ensure the installer is registered on the National Portal. The loan amount should cover the system cost minus any upfront payment you plan to make. Keep in mind that the subsidy is credited after installation, so your loan should cover the full cost initially.

Loan interest rate
5.75% per annum (repo rate + 50 bps)
Loan tenure
10 years
Subsidy for 3 kW
₹78,000
Subsidy processing time
Around 15 days after redemption request

Indicative rooftop solar system prices

  • 2 kW on-grid residential₹1,75,000–₹2,13,000 per system ₹1,75,000–2,13,000 / system
  • 3 kW on-grid residential₹2,15,000–₹2,47,000 per system ₹2,15,000–2,47,000 / system

How does the loan work with the subsidy?

The loan and subsidy are two separate components. You take a loan for the full system cost from a nationalized bank. After installation and net metering, you submit a redemption request on the National Portal. The subsidy amount is credited to your bank account within about 15 days. You can then use that amount to reduce your loan principal or for any other purpose.

This structure means you do not need to arrange the subsidy amount upfront. The loan covers the entire cost, and the subsidy acts as a reimbursement. This is particularly helpful for households that want to install solar but have limited savings.

What documents are needed for a solar loan?

Banks typically require identity proof, address proof, income proof, and the quotation from the registered installer. Since the loan is collateral-free under the scheme, you may not need to provide property documents as security, but the bank will verify your creditworthiness. The exact documents vary by bank, so check with the branch before applying.

Can I get a loan for a system larger than 3 kW?

The subsidy is capped at 3 kW, but you can install a larger system. The loan can cover the full cost of any system size, subject to the bank's approval. However, the concessional interest rate under the scheme is available for the loan amount, so you can finance a 5 kW or larger system at the same rate if the bank agrees.

What if I already have a solar system?

If you already have a rooftop solar system, you are not eligible for the subsidy again. The loan facility is for new installations under the scheme. If you are planning to expand your existing system, you may need to check with the bank for a separate loan product.

How do I find a reliable installer?

The National Portal lists registered vendors. You can select a vendor from the portal after applying for the subsidy. It is advisable to compare quotes from multiple vendors and check their track record before finalizing. The loan amount is disbursed to the vendor or to you, depending on the bank's process.