PFC, REC Make Further Reduction in Lending Rates

State-owned non-banking financial companies Power Finance Corporation (PFC) and REC Limited have further reduced their lending rates across all types of loans by 40 basic points (Bps), Ministry of Power (MoP) has said.

Union Minister for Power and New & Renewable Energy Mr. R.K. Singh expressed satisfaction at the continued efforts by both the companies to reduce rates and remain competitive. Singh said that continued reduction of lending rates by REC and PFC will help power utilities to borrow at competitive rates and invest in improving the power sector infrastructure, thereby benefitting the consumer by way of reliable and cheap power.

In the last one year approximately, both the organisations have reduced lending rates cumulatively by upto 3%. In order to give a boost to Renewable Energy, where long term funding is required, the rates have been revised to as low as 8.25%. The reduction in rates has been possible due to lower cost of borrowings by these organisations, in the past year or so.

It should be noted that PFC and REC are already providing short term loans at interest rates as low as 6.25%.

In September last year, PFC issued its maiden Euro 300 million 7-year Euro Bond issuance on September 13, 2021. The pricing of 1.841% achieved is the lowest yield locked in by an Indian Issuer in the Euro markets, PFC had said. Notably, It was the first-ever Euro denominated Green bond issuance from India. Moreover, it was the first-ever Euro issuance by an Indian NBFC and the first Euro bond issuance from India since 2017.

A few months prior (February) to this announcement,  REC Limited raised USD 500 million 5.5-year Reg-S only bonds issued under its Global Medium Term Programme of USD 7 billion. Proceeds of the bond will be used to finance power projects following the approvals granted by the RBI from time to time and under the ECB Guidelines, REC had said.