Public-sector banks turn down nearly four in 10 rooftop solar applications

Over 3 lakh applications rejected under PM-Surya Ghar Muft Bijli Yojana; 1.6 million rooftop solar installations completed so far, with CIBIL score cited as key filter

Public-sector banks (PSBs) have rejected 305,667 applications under the PM Surya Ghar: Muft Bijli Yojana out of a total of 803,515 applications received since its launch in February 2024 until August 2025, translating into a rejection rate of 38.03 per cent, according to a senior government official. 

The scheme, launched in February 2024 with a total outlay of ₹75,021 crore to support rooftop solar installations and provide up to 300 units of free electricity, has so far seen PSBs sanction ₹8,417.5 crore, with a total of 447,736 applications sanctioned. Apart from PSBs, private banks, regional rural banks, and non-banking financial companies also sanction loans under the scheme. 

According to a Parliament reply by Union Minister for New and Renewable Energy Pralhad Joshi in August this year, a total of 5.8 million applications have been submitted on the national portal and 1.6 million households have benefited from rooftop solar installations under the scheme as of July 31 this year. 

According to the official government portal, 1.6 million installations have been made under the programme from 6.1 million applications received. 

“One of the key reasons for the higher rejection rate is the Cibil score. Applicants are required to have a minimum Cibil score of 680 or above. This criterion filters out many applications, as we have observed that some applicants are already taking multiple loans under other schemes and have not fully repaid them, which leads to a drop in their Cibil score,” said a senior public sector banker. 

A second public sector banker observed that vendors sometimes fail to communicate properly with borrowers. “This scheme still requires proper communication and promotion. Some rejections happen due to incomplete or incorrect documentation. However, we are working to improve this through ongoing communication and awareness drives,” said the source. 

The rejection rates of major lenders are as follows: Punjab National Bank 39.23 per cent, State Bank of India 36.78 per cent, Canara Bank 35.8 per cent, and Bank of Baroda 30.93 per cent. 

The scheme provides for a subsidy of 60 per cent of the solar unit cost for systems up to 2 kilowatt (kW) capacity and 40 per cent of the additional system cost for systems between 2 to 3 kW capacity. The subsidy has been capped at 3 kW capacity. At current benchmark prices, this means a ₹30,000 subsidy for a 1 kW system, ₹60,000 for 2 kW systems, and ₹78,000 for 3 kW systems or higher. 

The PM Surya Ghar: Muft Bijli Yojana supports domestic manufacturing by mandating the use of solar modules and cells produced in India. “Chandigarh and Daman & Diu have achieved 100 per cent of their government building rooftop solar targets, leading the nation in clean energy adoption. States like Rajasthan, Maharashtra, Gujarat, and Tamil Nadu are also performing exceptionally well, contributing to the overall installation figures. The government is actively monitoring the progress across all states to ensure the smooth and timely execution of the scheme, with the goal of reaching 10 million households by 2026-27,” the Ministry of New and Renewable Energy said in March 2025.