In August 2019, the Reserve Bank of India (RBI) revised its 2015 guidelines, which categorized the renewable energy sector as a priority lending sector, by adding a provision that allows banks to increase their exposure to non-banking financial companies (NBFC) by permitting on-lending for the priority sectors.
Under the 2015 guidelines, renewable energy includes solar-based power generators, biomass-based power generators, wind mills, micro-hydel plants, non-conventional energy based public utilities, and remote village electrification. The guidelines also place limits on the amount that banks can loan to borrowers and includes a target for priority sector lending by all scheduled commercial banks operating in India of "10 percent of adjusted net bank credit (ANBC) or credit equivalent amount of off-balance sheet exposure, whichever is higher." In June 2019, this target was revised to 15 percent, but reverted back to 10 percent in the latest revisions in July 2019 and August 2019. In addition, the guidelines set a priority sector total of "40 percent of ANBC," with additional priority sectors including agriculture, export credit, education, housing, social infrastructure, and micro, small and medium enterprises.