Rural Electrification Corporation Ltd (REC) has been given the status of an infrastructure financing company (IFC) by Reserve Bank of India. The IFC status will allow the power sector lender to take an additional exposure of up to 5% of its own funds, in case of a single borrower and of 10% in case of a consortium of borrowers.The company can also buy equity stake in power projects—5% in case of single promoter and 10% in case of a consortium promoted project. The company can now also issue tax-free infra bonds to raise money.The investor gets tax rebate of Rs20,000 for investing in the infra bonds, but the interest on such bonds is taxable.“We plan to raise at least Rs1,000 crore by issuing tax-free infra bonds this fiscal year”, said HD Khunteta, director finance, REC.
The IFC status will also allow the company to raise upto $500 million through automatic route.
This year REC has tied up for $470 million worth of loan through ECB, under the approval route from the RBI.
The company is targeting big ticket power projects of being set up by Lanco, Reliance and Nagarjuna. The increased exposure limit will help the company offer higher amount to these power projects. Earlier, Power Finance Corporation was also granted the status of IFC.
REC plans to borrow Rs28,000 crore during the current financial year and the target for loan disbursement has been set between Rs25,000-26,000 crore. REC is also considering entering into retail banking.
The company, after having a meeting with its board members, will decide to apply with RBI to get the retail banking licence. RBI plans to issue 5 to 6 new licences this year in the retail banking sector.
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