Solar panel subsidy: Schemes and detailed process of getting loan from NABARD
According to the priority list released by the government in January 2016, for processing subsidy claims, schools and public institutions are on the top while residential projects are on low priority
India is the world’s third largest electricity producer, yet some parts of the country still don’t receive ample electricity. There are a number of cities, towns and villages that experience power cuts on a daily basis which causes a lot of inconveniences. That is why people are starting to realize the importance of alternate sources of electricity. In this case, solar energy can be regarded as a trusted source. In fact, with a view to promote the generation of electricity using solar energy, the Government of India launched the Jawaharlal Nehru National Solar Mission in the year 2010. It also has the objective of supporting domestic production of critical raw materials and products to achieve grid parity by the year 2022.
According to the priority list released by the government in January 2016, for processing subsidy claims, schools and public institutions are on the top while residential projects are on low priority. Thus, it gets very difficult to obtain a subsidy for residential projects. But there is a solution.
The following steps outline the process of purchasing a solar PV system. It also states how to get a loan/subsidy for the same with the help of NABARD.
- The most important thing which a buyer is required to do is to choose a reliable manufacturer or supplier of solar PV systems. Note that the manufacturer must be approved by the MNRE (Ministry of New and Renewable Energy)
- There are certain specific models that have been approved by the MNRE, only those are supposed to be considered as eligible under the scheme. It also needs to be mentioned that the benchmark cost of a solar PV system, stated by NABARD (National Bank for Agriculture and Rural Development), is a total of Rs 270 per Wp. However, you should stay updated about the revised unit costs from time to time by consulting your manufacturer or supplier.
- Total 40% subsidy can be claimed under circumstances where the benchmark cost is higher than the cost of the unit. However, the capital subsidy will be fully restricted to the maximum amount of capital subsidy (as per norms laid down by NABARD) if the unit cost is more than the benchmark cost
- It is also important to know that only certain groups of individuals which include self-help groups (SHGs), joint liability groups (JLGs), NGOs and farmer’s club are eligible for the loan through NABARD. This subsidy is not available to public or private limited companies.
- It is also necessary that the individual applying for the subsidy has an existing account with a regional rural bank or commercial bank. One can approach nationalized public banks for this purpose as well.
- 60% of the entire cost is eligible for a bank loan, while the remaining 40% will be subsidized. RBI norms decide the margin that is to be paid by the beneficiary. You can repay the loan within a term of 5 years according to the interest rates set by the RBI.
- The quotations and necessary documents, as available from the vendor, need to be submitted. Necessary documents include MNRE approval form, project proposal, TIN number and other important documents which need to be submitted to the bank and are provided by the vendor.
- After verification of all the documents, the bank will process the loan and send the required documents to NABARD for releasing the subsidy. EMI will commence as soon as the loan is processed but it takes some time for the release of subsidy through NABARD. No interest rate is applied to the subsidy part.
- If it is observed by the bank that the subsidy is being misused, the banks can call it off.
Keeping in mind the expense of installing a solar system, the main objective of the mission is to offer a subsidy scheme so that both individuals and organizations can be helped in acquiring solar energy systems at a reduced capital cost. The Indian Renewable Energy Development Agency Limited (IREDA) is responsible for implementing the scheme with the help of NABARD. After the modification of the scheme on 15th March 2012, it has been declared that 40% subsidy will be provided on capital costs o ..
The Indian Renewable Energy Development Agency Limited (IREDA) is responsible for implementing the scheme with the help of NABARD. After the modification of the scheme on 15th March 2012, it has been declared that 40% subsidy will be provided on capital costs of solar PV systems for units which are located in both urban and rural areas of India.