Mumbai: India’s state-run lender Rural Electrification Corp (REC) plans to raise $200 million from the offshore loan market by the close of the current fiscal year ending this month, a company official told Reuters.
The $200 million foreign currency loans will have a tenor of five years and could be denominated in yen or dollars, H.D. Khunteta, director of finance, said. The all-in cost of funding the loans is 170 basis points plus Libor.
The company is awaiting the Reserve Bank of India’s approval for raising the funds.
It will raise $100 million each from Bank of Tokyo Mitsubishi UFJ and Mizuho Bank, and plans to use the funds raised for the development of the Indian power sector, Khunteta said.
It also plans to seek approval from the Reserve Bank of India to raise around $750 million through external commercial borrowings in 2011-12.
REC provides loans to state electricity boards, state power utilities and the private sector for development of all segments of power infrastructure.
India faces a peak hour power shortage of nearly 14%, and sector players have lined up to expand capacity to satisfy a rapidly urbanizing population and rising industrialization.