New Delhi: State-run REC Ltd. has signed a memorandum of understand (MoU) with Punjab National Bank to jointly explore the possibility to fund the power sector and infrastructure & logistics sector projects under the consortium arrangement.
REC and PNB will partner to co-finance loans amounting to ₹55,000 crore over next three years, said a statement from REC.
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The Maharatna NBFC, REC, has diversified its portfolio towards infrastructure and logistics in FY23. Addressing the company annual general meeting in May, its chairman and managing director (CMD) Vivek Kumar Dewangan had said that the power ministry has allowed the company to finance up to 33% of its outstanding loan book in this sector.
“While posing faith in REC, ministry of power has also allowed our company to lend to non-power infrastructure & logistics sector to contribute to the accelerated development of our nation and I ecstatically report that during the first year itself, we have sanctioned more than ₹85,700 crore towards various projects spanning from metro, ports, airports, oil refineries, highways, steel infra to healthcare, educational institutions and also in sectors of IT infra/ fiber optics, etc. that constitute about 32% of overall sanctions of the ompany, in the last financial year,” he said.
REC provides long term loans and other finance products for power-infrastructure sector comprising of generation, transmission, distribution, renewable energy and new technologies like electric vehicles, battery storage, green hydrogen among others. More recently REC has diversified into the non-power infrastructure sector It loan book is currently above ₹4.54 trillion.
Amid the energy transition journey of the country, the company also plans to raise its loans towards green projects. The NBFC is looking at expanding its loan portfolio for green projects to ₹3 trillion by 2030. The CMD had said that REC would be known for its renewable energy initiatives across solar, wind, hybrid, and e-mobility projects, along with newer spaces like green hydrogen, green ammonia projects, round-the-clock projects and ethanol manufacturing.
“REC is committed to increase its present loan portfolio of green projects to the extent of more than ten times y the year 2030 amounting to ₹3 lakh crore“ he said.
The company had raised $1.15 billion in April. The loans have been tied up for a 5-year tenor and are benchmarked to Overnight SOFR (Secured Overnight Financing Rate), which is the benchmark rate for the loans denominated in USD.
The proceeds from this facility shall also be utilized to fund power, infrastructure and logistics sector projects as permitted under the ECB guidelines of the Reserve Bank of India.
On Tuesday, shares of REC on the BSE closed at ₹267.30 per share, down 1.15% from previous close. PNB shares on the BSE closed at ₹79.34, down 1.11% from its previous close.