The Punjab National Bank and the state-run REC Ltd. have signed a memorandum of understanding (MoU) to examine the prospect of funding infrastructure and logistics projects as part of a consortium. According to a statement from REC, PNB and REC would work together to co-finance loans totaling Rs 55,000 crore over the following three years. In FY23, the Maharatna NBFC, REC, expanded its holdings by adding infrastructure and logistics. Addressing the company's annual general meeting in May, its chairman and managing director (CMD) Vivek Kumar Dewangan had said that the power ministry has allowed the company to finance up to 33% of its outstanding loan book in this sector.
“While posing faith in REC, the ministry of power has also allowed our company to lend to non-power infrastructure & logistics sector to contribute to the accelerated development of our nation and I ecstatically report that during the first year itself, we have sanctioned more than Rs 85,700 crore towards various projects spanning from metro, ports, airports, oil refineries, highways, steel infra to healthcare, educational institutions and also in sectors of IT infra/ fiber optics, etc. that constitute about 32% of overall sanctions of the company, in the last financial year," he said. REC provides long-term loans and other finance products for the power-infrastructure sector comprising of generation, transmission, distribution, renewable energy and new technologies like electric vehicles, battery storage, and green hydrogen, among others. More recently, REC has diversified into the non-power infrastructure sector It loan book is currently above Rs 4.54 trillion.
Amid the energy transition journey of the country, the company also plans to raise its loans towards green projects. The NBFC is looking at expanding its loan portfolio for green projects to Rs 3 trillion by 2030. The CMD had said that REC would be known for its renewable energy initiatives across solar, wind, hybrid, and e-mobility projects, along with newer spaces like green hydrogen, green ammonia projects, round-the-clock projects and ethanol manufacturing. “REC is committed to increase its present loan portfolio of green projects to the extent of more than ten times by the year 2030, amounting to Rs 3 lakh crore, “ he said. The company had raised $1.15 billion in April. The loans have been tied up for a 5-year tenor and are benchmarked to Overnight SOFR (Secured Overnight Financing Rate), which is the benchmark rate for loans denominated in USD. The proceeds from this facility shall also be utilized to fund power, infrastructure and logistics sector projects as permitted under the ECB guidelines of the Reserve Bank of India.