The Reserve Bank of India said it will make small renewable energy projects eligible for priority financing.

The nation’s banks will offer loans of up to 150 million Indian rupees ($2.37 million) for purposes such as the purchase of solar-based power generators, biomass-based power generators and windmills, as well as for non conventional energy-based public
utilities such as street-lighting and remote village electrification systems. For individual households, the loan limit will be 1 million Indian rupees ($15,800) per borrower.

Under the priority lending route, banks must provide 40 percent of the net banking credit to specified sectors, according to the Reserve Bank of India’s April 23 announcement.

Vishal Pandya, director of REConnect Energy, told Bloomberg BNA April 27 that priority sector lending will bring significant traction to the rooftop solar industry, “especially for industrial and commercial consumers across states where industrial and commercial [electricity] tariffs are higher.” Wind, small hydroelectric and biomass-based projects also will benefit, he added.

India has a target of installing 175 gigawatts of renewable energy capacity by 2022 as part of Prime Minister Narendra Modi’s goal of 24-hour power supply, clean drinking water and a toilet for each household by India’s 75th year of independence.