REC may form SPV, rope in int bank for pvt banking licence

Rural Electrification Corporation (REC) today said it may form a special purpose vehicle (SPV), which would apply for a private banking license along with state-run Power Finance Corporation (PFC) and an international bank.

"If we can get a go-ahead from the Reserve Bank..Together with PFC...We can apply for private banking license," CMD REC J M Phatak told reporters here.

He added that a SPV is likely to be formed for the purpose and an international company may also join the endeavour.

"The SPV would apply for the banking licence and a global bank may also be roped in...However, it is at a nascent stage," Phatak added.

 

Meanwhile, the company said it would raise $500 million through a bond issue in Europe, Singapore and HongKong markets. The company has recently concluded a $470 million bond sale.

"We would raise $500 million (Rs 2,500 crore) through a bond issue in Europe, Singapore and HongKong in November or January," Director (Finance) REC H D Khunteta said here.

REC has been recently granted Infrastructure Finance Company (IFC) status by the RBI; it can now take an additional lending exposure of up to 5 per cent of its owned funds in case of a single borrower and up to 10 per cent of its owned funds in case of group borrowers.

The total permissible exposure would thus be 40 per cent of owned funds, in case of a group of borrowers.

The status allows REC to issue infrastructure bonds and raise funds up to $500 million (Rs 2,500 crore approximately) through external commercial borrowing (ECB) in a year.

"We may also raise Rs 1,000-1,500 crore through infrastructure bonds in December this year," Khunteta said.

REC is engaged in financing power generation, transmission and distribution projects in the country.