Green Loan: For those troubled by constantly rising electricity charges, installing solar panels on their rooftops can be an excellent option. Installing a solar system helps reduce electricity bills and lowers long-term power expenses. However, installing solar panels requires a significant upfront investment. If you lack the necessary budget, a ‘Green Loan’—specifically a solar loan—can be very useful.
Under the Central Government’s special ‘PM Surya Ghar: Muft Bijli’ scheme, bank loans are available to help people install rooftop solar panels. Green loans are being offered for this purpose. Let us explore this in detail.
What is a Green Loan?
A Green Loan is a type of loan used for environmentally friendly initiatives. It provides financial assistance for needs such as solar panels, renewable energy, and energy-efficient projects. Loans taken for installing rooftop solar panels fall into this category. Under the PM Surya Ghar scheme, many banks are offering loans for rooftop solar systems.
The benefit here is that the customer does not have to pay the entire cost of the solar system out of pocket upfront. They can install the system using a bank loan and also avail themselves of available government subsidies.
How much solar loan can you get?
Loan amounts under the PM Surya Ghar scheme vary based on the solar system’s capacity. According to available information, you can get a loan of up to ₹6 lakh for rooftop solar systems with a capacity of up to 10 kW. For systems up to 3 kW, a loan of up to ₹2 lakh is available. The actual loan amount depends on the bank’s terms, the cost of the solar system, and the applicant’s eligibility.
What is the interest rate on a solar loan?
Green loans are offered at lower interest rates. Interest rates vary by bank and depend on the applicant’s profile and the bank’s specific terms and conditions. According to reports, interest rates for solar loans at some banks may start from approximately 5.75% to 7% per annum. Therefore, interest rates and loan tenures may vary across different banks.
Government to provide a subsidy of ₹78,000
Under the PM Surya Ghar Scheme, eligible consumers receive financial assistance of up to ₹78,000 for installing rooftop solar systems. The subsidy amount depends on the capacity of the solar system; therefore, not everyone will receive the full ₹78,000 subsidy. If a customer has obtained a bank loan to install the solar system, the subsidy amount may be credited to the loan account, subject to the scheme’s guidelines and the bank’s procedures.
Benefits of installing a 3 kW solar system
Families wishing to install a 3 kW rooftop solar system can avail themselves of financial assistance under the scheme as well as bank loans. The total cost includes the price of solar panels, inverter, mounting structure, wiring, installation charges, system capacity, and the vendor’s quoted price.
Who can avail of a ‘Green Loan’?
To obtain a bank loan for solar panels, applicants generally need to meet specific eligibility criteria. Firstly, the applicant must be an Indian citizen and possess a valid electricity connection. A suitable rooftop or location is required for the installation. The application must comply with the scheme’s eligibility norms. Additionally, the applicant must not have previously availed of any other solar subsidy where applicable. Banks assess the applicant’s income and eligibility to determine loan approval.
Impact of CIBIL score
A CIBIL score plays a crucial role in securing a loan. A good credit score increases the likelihood of loan approval. Details indicate that a CIBIL score of 650 or higher is typically required for loans exceeding ₹2 lakh.
Documents required for installing solar panels
Banks require specific documents to install solar panels. Required documents include the Aadhaar card, PAN card, identity proof, electricity connection details, bank account details, income certificate, solar system quotation, solar vendor certificate, and KYC documents.
How to apply for a Green Loan
Applying for the PM Surya Ghar scheme is simple.
First, register on the rooftop solar portal.
Next, provide details regarding your electricity connection.
Then, select a solar vendor.
Determine the cost of your solar system.
Apply for the loan.
The bank will verify your required documents.
Install the solar system.
Finally, the bank will process the subsidy for eligible customers.
Benefits of installing solar panels
Installing solar panels on your roof helps reduce electricity expenses. You can generate electricity to meet your household needs using the solar system. Additionally, it serves as an energy source, reducing reliance on conventional electricity. If the system is the right capacity and installed correctly, you can eventually recover the initial cost through savings on electricity bills.