📊 Pricing and ROI
Green Home Loans for Solar in India 2026: Banks, Interest Rates and How to Apply
SBI green loan rate8.5-9.5%
Section 24b deductionRs 2 lakh/yr
Loan tenureUp to 15 years
Combine withPM Surya Ghar
Best useAfter subsidy gap
Why consider a green loan for solar?
After the PM Surya Ghar subsidy of Rs 78,000, a 3 kW solar system still costs Rs 42,000 to Rs 72,000 out of pocket. For many Indian homeowners this net cost is manageable from savings. But for those who prefer not to disturb savings, or who want a larger system, green home loans offer two advantages over personal loans: lower interest rates (typically 1 to 2 percentage points lower), and interest tax deductibility under Section 24(b) of the Income Tax Act.
Banks offering green or solar-specific loans: April 2026
| Bank | Loan Product | Interest Rate | Tenure | Max Amount |
|---|---|---|---|---|
| SBI | SBI Green Home Loan / SBI Surya Shakti | 8.5-9.5% p.a. | Up to 15 years | Rs 10 lakh+ |
| Bank of Baroda | Baroda Solar Loan | 9.0-10.5% p.a. | Up to 10 years | Rs 5 lakh |
| Punjab National Bank | PNB Solar Power Loan | 9.5-11% p.a. | Up to 7 years | Rs 5 lakh |
| NABARD (via NBFC) | Rural Solar Finance | 8-10% p.a. | Up to 10 years | Rs 3 lakh |
| Bank of India | Star Solar Loan | 9-11% p.a. | Up to 10 years | Rs 5 lakh |
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Interest rates vary by applicant credit score, property valuation, and prevailing repo rate. The rates above are indicative as of April 2026. Always get a formal loan sanction letter with rate confirmed before committing to an installer or loan product.
SolarSahi guidance · April 2026
The Section 24(b) tax benefit explained
If your green solar loan is secured against your property (home loan category), the annual interest paid qualifies for deduction under Section 24(b) of the Income Tax Act. The maximum deduction is Rs 2 lakh per year on interest paid for a self-occupied property. For a taxpayer in the 30 percent tax bracket, Rs 2 lakh interest deduction saves Rs 60,000 per year in taxes.
💰30% tax bracketRs 2 lakh deduction saves Rs 60,000/year. Significant additional benefit on top of solar savings.
💰20% tax bracketRs 2 lakh deduction saves Rs 40,000/year. Still meaningfully improves solar financial case.
❌Personal loanNo Section 24(b) deduction available. Personal loans for solar do not qualify for this tax benefit.
⚠️New tax regimeSection 24(b) deduction is only available under the old tax regime. Does not apply if you have opted for the new tax regime.
How to apply: step by step
1
Get your installer quote firstBanks need a formal quote from a DISCOM-empanelled installer to process the loan. Get the quote, then approach the bank.
2
Calculate the net amount after PM Surya Ghar subsidyApply for a loan amount equal to (installer quote minus Rs 78,000 subsidy). Do not borrow for the full amount if subsidy will arrive.
3
Submit documents: income proof, property papers, installer quoteStandard KYC plus property documents for secured green home loan, or just income proof for unsecured solar loan. Processing takes 7 to 21 working days.
4
Loan disbursed directly to installer after installationMost banks disburse directly to the installer account after installation is verified. Some disburse to your account for you to pay the installer.
Frequently asked questions
Is a green home loan better than a personal loan for solar?
Yes, in most cases. Green home loans typically carry 1 to 2 percent lower interest than personal loans. They also qualify for Section 24(b) tax deduction under the old tax regime. Personal loans have no tax benefit and carry higher interest. The only advantage of a personal loan is faster disbursal and no property security requirement.
Can I use the PM Surya Ghar subsidy to prepay the loan?
Yes and this is actually the recommended approach. Apply for a loan for the full installation cost, get the system installed, and when the PM Surya Ghar subsidy arrives (typically 3 to 6 months after commissioning), use it to make a partial prepayment on the loan. This reduces outstanding principal and saves on future interest.
What is my EMI on a Rs 1 lakh green home loan at 9% for 5 years?
At 9% p.a. for 60 months, the EMI is approximately Rs 2,076 per month. Over 5 years the total interest paid is approximately Rs 24,560. If you are saving Rs 1,800 to Rs 2,500 per month from solar, the EMI is comfortably covered by savings from day one.
Does my CIBIL score affect green loan eligibility?
Yes. A CIBIL score above 700 typically qualifies for the standard published rate. Scores below 650 may result in higher rates or rejection. Check your CIBIL score before applying and address any outstanding issues. Solar loans are treated like any secured or personal loan product from a credit assessment perspective.
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