The State Bank of India (SBI) has proposed that the limit for lending to renewable energy entities under priority sector lending should be increased from ₹350 million (~$3.67 million) to ₹1 billion (~$10.5 million).

The public sector lender has also recommended that the lending limit for rooftop solar systems installed by individuals, including those under the PM Surya Ghar: Muft Bijli Yojana, must be raised to ₹20 million (~$210,335) from ₹1 million (~$10,498).

According to the existing Reserve Bank of India (RBI) guidelines for priority sector lending, loans for renewable energy-based power generators and public utilities like street lighting and electrification of remote villages are covered.

In a research paper, the SBI noted that the data for the last five years indicates that while considerable progress has been made in priority sector lending to renewables, it had grown only at 9% CAGR.

It has also recommended that under the 7.5% sub-target for micro enterprises, the eligible category should be broadened to include lending to MSME entities involved in the manufacture of electric vehicles and allied components. The move aligns with India’s commitment to reducing its carbon footprint and promoting green energy.

Calling for a review of priority sector lending guidelines, the SBI also recommended that a separate category ‘Climate Sustainability Finance’ should be created for activities which contribute to climate sustainability.

The priority sector lending limits to renewable energy were raised by the RBI in March 2025.

At the recently concluded Mercom India Renewables Summit 2026, panelists observed that  India’s clean energy financing landscape has expanded significantly over the past decadeand that capital flows had shifted towards manufacturing, grid infrastructure, battery storage, and differentiated business models.

Corporate funding in India’s solar sector has exceeded $24 billion since 2010, with investment increasingly shifting from downstream project development toward domestic manufacturing. Storage funding, though smaller than solar funding, has begun to rise as battery demand and grid flexibility needs increase.