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RBI Raises Priority Sector Lending Limit to INR 35 Crore for Renewable Energy Sector

The RBI has raised lending limits for renewable energy projects under priority sector lending, allowing up to INR 35 crore for RE-based power generators and public utilities, and INR 10 lakh for households, effective April 1, 2025.

March 25, 2025. By Mrinmoy Dey

Reserve Bank of India (RBI) has increased the lending limit for the renewable energy sector along with broadening the purposes based on which loans may be classified under ‘Renewable Energy’ in its revised priority sector lending guideline. These new guidelines will come into effect from April 1, 2025.

As per the new regulations, bank loans up to a limit of INR 35 crore to borrowers for renewable energy-based power generators and for renewable energy-based public utilities, viz., street lighting systems, remote village electrification etc., will be eligible for priority sector classification. For individual households, the loan limit will be INR 10 lakh per borrower.

It further noted that loans to farmers for the installation of stand-alone solar agriculture pumps and for solarisation of grid-connected agriculture pumps are included in priority sector lending for agriculture. Additionally, farmers can also take loans for the installation of solar power plants on barren/fallow land or in stilt fashion on agricultural land owned by the farmers.

RBI last revised its priority sector lending guidelines for renewable energy in September 2020, doubling loan limits for eligible projects. Bank loans of up to INR 30 crore for solar, biomass, wind, micro-hydel plants, and other non-conventional energy-based public utilities were included under priority sector classification.

The enhanced coverage of the revised guidelines is expected to facilitate better targeting of bank credit to the priority sectors of the economy, RBI said in a statement.

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