The PM Surya Ghar subsidy covers a meaningful share of a residential solar system, but it arrives after commissioning, not before. Which leaves most buyers with the same question: how do you pay for the system in the meantime, and is borrowing for it actually sensible?
This guide covers the collateral-free loan route built into the scheme, the rates and terms banks are offering in 2026, what they check before approving, and how the subsidy interacts with your loan once it lands.
The PM Surya Ghar loan route
The scheme, administered through the national rooftop solar portal, includes a concessional collateral-free loan of up to ₹2 lakh for residential systems up to 3kW, offered through nationalised banks at a rate linked to the RBI repo rate. The important features:
- No collateral or security required within that ₹2 lakh limit
- Repayment tenure of up to 10 years (120 months)
- A floating rate, so the EMI moves with the repo rate rather than staying fixed
- Several banks waive the processing fee for this specific product
Above ₹2 lakh, and for systems larger than 3kW, lending moves to the bank's standard terms, which means a higher rate and usually some security requirement.
Current rates and terms
As of 2026, the concessional rate on the collateral-free tranche sits at around 5.75% per annum, repo-linked, across participating public sector banks. Above that tranche, rates step up considerably.
| Bank | Up to ₹2 lakh | Above ₹2 lakh | Notes |
| State Bank of India | Around 5.75% | Around 7.90% up to ₹6 lakh | Collateral-free to ₹2 lakh, tenure up to 120 months |
| Canara Bank | Around 5.75% | Around 8.75% | Processing fee waived, 6-month repayment holiday |
| Indian Bank | Around 5.75% | Home loan linked rates | Nil processing fee, tenure up to 120 months |
Treat every figure here as indicative rather than quoted. These are floating repo-linked rates that change when the RBI moves, and each bank revises its spread periodically. Confirm the current rate with the branch before committing, and ask specifically whether the quoted rate applies to the whole amount or only to the first ₹2 lakh.
How the subsidy interacts with your loan
This part causes the most confusion, so it is worth being precise.
The loan is sized against the full system cost, because you pay your installer in full. The PM Surya Ghar subsidy arrives afterwards, by Direct Benefit Transfer into your bank account, once the system is commissioned and the claim is processed.
You then have a choice: keep the subsidy and continue the original EMI, or use it to part-prepay the loan, which cuts either your EMI or your remaining tenure. For a 3kW system, the ₹78,000 central subsidy against a loan of roughly ₹1.8 lakh to ₹2.1 lakh is a large enough prepayment to change the loan materially. Most banks allow prepayment on floating-rate retail loans without a penalty, but confirm that in writing before signing.
The practical sequence: borrow for the full amount, install, commission, claim, receive the subsidy, then decide. If your state adds a top-up on the central amount, as several do, that prepayment gets larger still. Our state-by-state subsidy guide covers which states pay extra.
What banks check
- CIBIL score. Most participating banks look for 680 or above on this product. Some accept new-to-credit applicants with no score at all, which is a genuine concession on this scheme.
- Income proof and repayment capacity, assessed the way any retail loan would be.
- The quotation and vendor details, since the loan is tied to a specific installation. The vendor generally needs to be registered on the national portal, which is also a subsidy condition.
- Property ownership or a no-objection certificate, because the system is being fixed to a roof.
- Your electricity connection details, which tie the application to the subsidy claim.
Banks are not assessing the panels themselves, which means loan approval is no indication that the equipment is any good. That check is still yours to make, and our best solar panel guide covers the specifications worth verifying first.
Other ways to finance solar
Home loan top-up. Often a lower rate than an unsecured personal loan and a longer tenure, though it puts solar on your house security and generally needs an existing home loan in good standing.
Personal loan. Fast and unsecured, but at 11% to 18% this usually undoes much of the savings the system generates. Worth it only when speed matters more than cost.
OPEX or RESCO model. For commercial projects rather than homes: a developer funds and owns the system, you buy the generated power at an agreed tariff. No capital outlay and no loan, but also no ownership, no depreciation benefit, and lower lifetime savings. Our commercial solar guide covers the trade-off.
Business term loan with accelerated depreciation. For companies, the 40% first-year written-down value depreciation usually makes owning the asset more attractive than a RESCO arrangement, provided the cash flow supports it.
Does borrowing for solar make sense?
The test is simple: compare your monthly EMI against the electricity bill the system eliminates.
A 3kW residential system generates roughly 12 to 15 units a day. At a tariff of ₹8 per unit, that is in the region of ₹2,900 to ₹3,600 of avoided electricity cost a month. A ₹2 lakh loan at 5.75% over 10 years produces an EMI in a broadly similar range, which means the system can be close to self-funding from month one, before the subsidy prepayment even lands.
That arithmetic works because the concessional rate is unusually low. At personal loan rates it does not work nearly as well, which is the main argument for using the scheme route rather than whatever credit is quickest to arrange. For the full cost picture behind these numbers, see our 3kW system price guide and our installation cost breakdown.
Final word on solar panel loans
The collateral-free tranche up to ₹2 lakh at a repo-linked rate near 5.75% is the cheapest money most homeowners will be offered for anything, and it is specific to this scheme. Borrow against the full system cost, use the subsidy to prepay when it lands, and check that your installer is portal-registered before signing, because that single condition governs both the loan and the subsidy.
For current pricing on ALMM-listed N-Type TOPCon modules to put in your quotation, contact our team.
Frequently asked questions
What is the interest rate on a solar panel loan in India?
Under the PM Surya Ghar route, the collateral-free tranche up to ₹2 lakh is offered at around 5.75% per annum, linked to the RBI repo rate, through participating public sector banks. Amounts above ₹2 lakh move to standard rates, commonly around 7.90% to 8.75% depending on the bank. These are floating rates, so confirm the current figure with the branch.
Can I get a solar loan without collateral?
Yes. The PM Surya Ghar scheme provides collateral-free loans up to ₹2 lakh for residential rooftop systems up to 3kW, through nationalised banks, with tenures up to 10 years.
What CIBIL score is needed for a solar panel loan?
Most participating banks look for a CIBIL score of 680 or above. Some accept new-to-credit applicants with no credit history on this particular scheme, which is a concession not usually available on retail loans.
Does the subsidy reduce my loan amount?
Not automatically. The loan is sized against the full system cost, and the subsidy arrives later by direct bank transfer after commissioning. You can then use it to part-prepay the loan, which reduces either your EMI or your remaining tenure. Confirm with your bank that prepayment carries no penalty.
Is it worth taking a loan for solar panels?
At the concessional scheme rate, usually yes. A 3kW system saves roughly ₹2,900 to ₹3,600 a month on electricity at an ₹8 per unit tariff, which is broadly comparable to the EMI on a ₹2 lakh loan at 5.75% over 10 years. At personal loan rates of 11% to 18%, the maths is far less favourable.
Can businesses get a loan for commercial solar?
Yes, through standard business term loans rather than the PM Surya Ghar route, which is residential only. For companies, accelerated depreciation at 40% of written-down value in year one usually makes a financed purchase more attractive than a RESCO or OPEX arrangement, provided cash flow supports the EMI.
