REC to borrow Rs 28,000 cr in FY11

State-run Rural Electrification Corp (REC) today said it will borrow Rs 28,000 crore in the current financial year for financing power projects, out of which $1 billion will be overseas debt.

"REC has a borrowing programme for raising Rs 28,000 crore in the financial year 2010-11," company's Chairman and Managing Director J M Phatak told reporters here.

"To diversify our investor base and to tap international market at a competitive rate, REC has planned to raise external commercial borrowings (ECB) of $1 billion (approximately Rs 4,600 crore)," he said.

REC has already raised $200 million through ECBs in the April-June quarter and plans to raise another $400 million by the first week of September.

REC has further plans to raise Samurai bonds from the Japanese market, he said. Samurai bonds are yen-denominated bonds issued in Tokyo by a non-Japanese company and subject to Japanese regulations.

The company plans to sanction loans to the tune of about Rs 50,000 crore in the current fiscal and its disbursements are likely to increase 30 per cent during the same period.

"Our sanctions this year would be around Rs 45,000-50,000 crore," REC Director (Finance) H D Khunteta said, adding that the company's loan disbursement target this fiscal is Rs 28,000 crore.

The company disbursed loans to the tune of Rs 21,000 crore in the previous fiscal (2009-10).

REC has applied to the Reserve Bank of India for NBFC-IFC status, which would enhance the company's exposure in financing power projects.

There are four types of NBFCs (non-banking finance companies) -- asset finance companies (AFCs), loan companies, investment companies and IFCs (infrastructure finance companies). IFCs were added to the NBFC category this February.

"... For NBFC-IFC status, we have already applied to RBI... We may get their (RBI) nod by August 14," Khunteta said.

The capital adequacy ratio (CAR) requirement for an NBFC-IFC is 15 per cent.

REC's CAR is over 21 per cent, he added.

REC is a non-banking finance company engaged in financing power generation, transmission and distribution projects.