Rooftop solar loan from public sector banks: interest, collateral and EMI examples
How collateral-free rooftop solar loans under PM Surya Ghar work at public sector banks, repo-linked interest, margin money, documents and worked EMI examples.
Public sector banks offer collateral-free loans for home rooftop solar under PM Surya Ghar, with interest set at the RBI repo rate plus 0.5 percentage points for loans up to ₹2 lakh, with tenures of up to 10 years. Parliamentary replies in March 2025 put that rate at 6.75%; after later repo cuts, reports in mid-2026 cited 5.75%; with the RBI policy repo rate at 5.50% in October 2026, the scheme rate works out to 6.00%. Larger loans (for bigger systems) are priced higher by each bank. Rates move with the repo rate, so use the rate in your sanction letter. The bank pays the vendor. Under MNRE's scheme guidelines, if your loan details are on the national portal the CFA is credited to your loan account (any excess goes to your bank account), which prepays the loan; otherwise it comes to your own account and you can choose to prepay. On an illustrative ₹1,60,000 loan at 6.00% over seven years, the EMI is about ₹2,337 and the total interest about ₹36,300; prepaying with the subsidy can cut that interest to roughly a quarter. This guide explains how these loans work and how to compare them.
How the scheme loan works
| Feature | Typical arrangement (check your bank) |
|---|---|
| Lender | Public sector banks and some other scheduled banks participating in the scheme |
| Collateral | Not required for residential rooftop loans within the scheme's limits |
| Interest | Repo rate + 0.5% for loans up to ₹2 lakh; bank-specific (higher) rates above that |
| Margin money | Some banks ask you to pay a share of the system cost yourself; ask for the figure |
| Tenure | Up to 10 years; choose the shortest EMI you can afford |
| Disbursement | Usually to the registered vendor against the quotation and installation milestones |
| Application | Through the bank or via the loan link on the national portal |
The figures above are a summary of how the scheme loan has been described; the bank's product terms are what bind you. Ask for the key fact statement, which banks must give for retail loans, and read the interest rate, reset clause, processing fee and prepayment terms.
The EMI formula
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12) and n is the number of months. The solar loan EMI calculator does this for you.
Worked examples (illustrative)
A 3 kW system costs ₹1,80,000 including GST. You pay ₹20,000 margin money and borrow ₹1,60,000 at 6.00% (repo 5.50% + 0.5, October 2026; check yours).
| Tenure | EMI (approx.) | Total interest (approx.) |
|---|---|---|
| 5 years | ₹3,093 | ₹25,600 |
| 7 years | ₹2,337 | ₹36,300 |
| 10 years | ₹1,776 | ₹53,200 |
A longer tenure lowers the EMI but raises total interest. Compare the EMI with your expected monthly bill saving: an illustrative 3 kW system saving ₹21,000 a year saves about ₹1,750 a month, so a seven-year EMI of ₹2,337 means the system costs you about ₹590 a month net until the subsidy arrives.
Using the subsidy to prepay
Suppose the ₹78,000 CFA is credited three months after installation and you prepay it, keeping the EMI at ₹2,337.
- Balance after three EMIs ≈ ₹1,55,400.
- After prepayment ≈ ₹77,400.
- At ₹2,337 a month, that clears in about 37 more months.
- Total interest falls from about ₹36,300 to roughly ₹9,800.
If the repo rate rises, the same loan costs more: at an illustrative 7%, the seven-year EMI would be about ₹2,415 and total interest about ₹42,800.
Now the EMI exceeds the bill saving only for about three years, and the loan is gone well within the inverter's warranty period. Check that your loan allows prepayment without penalty; for floating-rate loans to individuals, RBI rules generally do not allow foreclosure or prepayment charges, but read your terms.
Documents banks commonly ask for
- KYC (Aadhaar, PAN) and address proof;
- latest electricity bill showing the consumer number in your name;
- proof of ownership of the house or roof;
- vendor's quotation and, where asked, the DISCOM feasibility approval from the portal;
- income proof (salary slips, ITR or bank statements), depending on the loan size;
- bank statements for recent months.
Comparing loan options
| Option | How it works | Watch out for |
|---|---|---|
| Scheme rooftop solar loan (public sector bank) | Collateral-free, repo-linked, disbursed to vendor | Processing time; documentation |
| Home loan top-up | Extra amount on an existing home loan | Longer tenure; check rate and charges |
| Personal loan | Unsecured, quick | Usually much higher interest |
| Vendor EMI or finance partner | Arranged by the installer | Hidden costs, higher effective rate; read the agreement |
| Paying cash | No interest | Opportunity cost of savings |
If a vendor offers "zero-cost EMI", ask for the full loan agreement and the effective interest rate; the cost is often built into the system price.
Rate changes
If your loan is linked to the repo rate, your EMI or tenure changes when the RBI changes the repo rate and the bank resets your rate. Ask how often resets happen and whether the bank will change your EMI or tenure.
When a loan does not make sense
- Your state already gives you most units free, so the bill saving is small.
- You expect to move house within a few years.
- The EMI would stretch your budget if your income dropped.
Back to the pillar guide: rooftop solar cost and payback. Related: PM Surya Ghar subsidy explained, payback examples for 1, 3 and 5 kW.
Frequently asked questions
Is the subsidy paid to the bank?
It can be. MNRE's guidelines say that where the consumer has taken a loan and its details are in the portal profile, the CFA is transferred to the loan account, up to the outstanding amount, with any remainder paid into the consumer's bank account. Without a linked loan, it is credited to the applicant's bank account and you decide whether to prepay.
Can I get a loan if the house is in my spouse's name?
Banks usually want the borrower to be the owner or co-owner and the electricity connection to match. Ask the bank before applying.
Does a solar loan affect my credit score?
Yes, like any loan. Timely EMIs help; missed EMIs hurt.
When should I consult someone?
For large systems, business premises or complex ownership, speak to the bank and, if needed, a chartered accountant.
Official sources
- PM Surya Ghar national portal — loan application link and participating banks
- Reserve Bank of India — repo rate and rules on loan charges
- RBI Ombudsman complaint portal — complaints against banks
