REC aims to raise $1 bn loan from ADB, Korea Exim

REC is planning to take a blended loan of up to US$ 1 billion from the Asian Development Bank (ADB) and Export-Import Bank of Korea (Korea Eximbank).

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The state-run lender REC has announced major plans to raise funds from abroad, preparing for an expected increase in credit demand from all segments of the power industry as the government aims to double capacity by 2032.

Chairman and managing director Vivek Kumar Dewangan told FE that the lender intends to take a combined loan of up to US$ 1 billion from the Asian Development Bank (ADB) and the Export-Import Bank of Korea (Korea Eximbank).

The company is also in the process of negotiating another US$ 500 million term loan with KfW Development Bank. They have already submitted the performance progress report (PPR) to the finance ministry. The KfW Development Bank loan may eventually be increased to US$ 1 billion.

In FY25, REC intends to reduce its funding cost by 12 basis points, or approximately 7%. The company intends to increase its external commercial borrowing this fiscal year, initially aiming to raise US$ 2 billion through green bonds. Following completion, it intends to raise an additional US$ 6 billion. Last fiscal, the company raised US$ 7 billion in external commercial borrowing.

“External commercial borrowing and foreign currency borrowing have become a cheaper option for us as the RBI (Reserve Bank of India) is holding the repo rate steady at 6.5%. We have been able to bring down our cost of funding from foreign currency borrowing to say 6.6-6.7% against 7.5-7.7% in domestic borrowing,” said Dewangan. So far, the company has successfully hedged 99% of its external commercial borrowing.