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Business News/ News / India/  PFC and REC cut lending rates
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PFC and REC cut lending rates

The development effective 1 April assumes significance given that PFC and REC are the largest lenders to the Indian power sector space

Photo: MintPremium
Photo: Mint

New Delhi: State run Power Finance Corporation (PFC) and Rural Electrification Corporation Ltd (REC) have reduced lending rates by 2 percentage points for the next financial year.

The development effective 1 April assumes significance given that PFC and REC are the largest lenders to the Indian power sector space. They are also group companies post PFC bought a controlling stake in the state-run peer REC Ltd in 2019.

“PFC and REC as group companies have been aligning operations to realise synergies. As a part of such effort, PFC and REC have now decided together to reduce lending rates upto 2%. This initiative was undertaken to offer competitive rates, in line with the rates being offered by peers in the market. This will also help PFC and REC to continue their business growth going forward in addition to maintaining reasonable spreads," PFC said in a statement on Wednesday.

“The reduction in lending rates will help both PFC and REC to offer lower rates to Power Utilities, which will reduce their borrowing costs thereby reducing their interest payments and in turn benefitting the end consumer in terms of lower tariff," the statement added.

In another development, state-run NHPC Ltd, India’s largest hydro power producer, has taken over the stressed 120-megawatt (MW) Rangit-IV hydropower project in Sikkim.

While PFC was the lead financial institution for the project developed by Jal Power Corporation Ltd., Punjab National Bank was a co-lender in the consortium.

“Power Finance Corporation (PFC) as lead FI and PNB as co-lender of the consortium, completes successful resolution of stressed asset – 4x30 MW Rangit-IV HEP of Jal Power Corporation Ltd (JPCL) and handed over the project to NHPC Ltd on 31.03.2021," PFC said in another statement.

Of India’s installed power-generation capacity of 373.43GW, hydropower projects account for around 12.23% or 45.69GW capacity.

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Published: 31 Mar 2021, 08:34 PM IST
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