new delhi, Sept. 9 -- Developers of renewable power may get enhanced access to cheaper bank loans in the near future, with the Centre working on a proposal mandating dedicated priority lending for such projects. The ministry of new and renewable energy (MNRE) is preparing a recommendation to the finance ministry to carve out a sub-target under priority sector lending (PSL) for renewable energy (RE) projects, two people aware of the development said. Priority sector lending rules require banks to allocate a specific portion of their loans to certain sectors that might not otherwise receive timely credit. While renewable energy is among the priority sectors, the proposal aims to ensure guaranteed lending to the sector. Currently, banks must allocate 40% of their adjusted net banking credit or their credit equivalent amount of off-balance sheet exposure (CEOBSE), whichever is higher, to PSL, and sub-targets have been prescribed only for agriculture (18%), micro enterprises (7.5%), and loans for economically weaker sections (12%). "Financing from banks needs to gain pace. Although renewable energy is covered under priority sector lending, credit through this window is yet to pick up as there are several sectors under PSL. Either you get almost all of the funds under PSL for renewables, or you don't get anything at all. So, there is a consideration to propose a sub-target or mandate for renewables under PSL," one of the people mentioned above said. The government has set ambitious targets of achieving 500 GW of non-fossil-fuel capacity by 2030 and net-zero emissions by 2070. Better access to bank loans could help solar and wind power developers complete their projects faster and cheaper, potentially leading to lowerpowertariffs. A second person aware of the development said if the proposal took concrete shape and renewables got a separate mandate, sub-sectors such as solar, wind green hydrogen and hybrid projects could be explored. Queries sent to the Union ministries of new and renewable energy and finance were unanswered till press time. Data from SBI Research showed that bank loans to the renewable energy sector under PSL stood at Rs.7,558 crore in the first 10 months of FY25 (April 2024 to January 2025). They accounted for just 8% of the total value of bank loans for the renewable energy sector over this period, and just over 1% of the Rs.6.64 lakh crore in loans for the overall power sector in that time. Since renewable energy was included under PSL in 2015, several amendments have been made to boost liquidity for the sector. In 2015, PSL offered loans up to Rs.15 crore for things like solar-based power generators, biomass-based power generators, and micro-hydel plants. In 2020 this was raised to Rs.30 crore per borrower, and in March 2025 it was raised to Rs.35 crore per borrower with effect from 1 April 2025. The government broadened the criteria for loans to be classified under 'renewable energy' in March....