REC targets Rs 27,000-crore disbursement in 2010-11

State-owned Rural Electrification Corporation (REC) today said it is targeting a disbursement of Rs 27,000 crore in the current financial year (FY11) and Rs 10,000 crore by this month. “Our target is to disburse Rs 27,000-crore loans in FY11 and Rs 10,000 crore by end-September,” REC Chairman and Managing Director J M Phatak told reporters here. REC provides loan assistance to state electricity boards and state power utilities for investments in rural electrification schemes.

The Reserve Bank of India (RBI) had recently granted infrastructure finance company status to REC, which would allow it to lend more to power projects. “This status will help us a lot. We can now take an additional lending exposure of up to five per cent of our owned funds in the case of a single borrower and up to 10 per cent of our owned funds in the case of a group of borrowers. The total permissible exposure would be 40 per cent of owned funds in the case of a group of borrowers,” he said.

REC has also got approval from RBI to raise foreign institutional investor (FII) stake in the company to 33 per cent from 22 per cent. “We have received the Reserve Bank of India’s approval to increase the stake of foreign institutional investors in the company to 33 per cent from 22 per cent,” he said.

Keen to enter banking
REC is keen to foray into the banking sector in association with Power Finance Company and is awaiting policy clarity from the regulator.

“We will be able to take our final decision on the matter once RBI takes a final decision in this regard,” Phatak said.

RBI had, in early August, put up a discussion paper seeking suggestions by September 30 for allowing local industrial and business houses to enter banking.

The decision came after the government had said in the Union Budget 2011 that, to further the financial inclusion process, the central bank would offer private bank licences.