Borrowing money for green projects becomes easier
What's the story
The conventional thermal and hydropower sectors in India have no projects queued up in pipeline.
This has made loans easier and cheaper, providing a thrust to the renewable energy sector.
Backing the power sector, Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) will offer attractive terms to renewable projects.
Interest rates for loans on renewable energy projects will vary between 10.5% and 11.5%.
REC
Rural Electrification Corporation Ltd
Rural Electrification Corporation Limited (REC) is a leading public Infrastructure Finance Company in India's power sector.
Financing and promoting rural electrification projects across India, it's headquarters are based in Delhi.
It's beneficiaries include Central/State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, NGOs and Private Power Developers.
It is listed on both the National Stock Exchange and Bombay Stock Exchange.
PFC
Power Finance Corporation Ltd.
Power Finance Corporation Ltd, established in 1986, is an Indian financial institution, the back bone of Indian Power Sector.
It was initially wholly owned by the Government of India and later issued an Initial Public Offer (IPO) in 2007.
Listed on the NSE and the BSE, it was awarded the KPMG-Infrastructure Today Award in 2008 for it's contribution to the power sector's progress.
Information
Decrease in lending rates
The lending rates to renewable energy projects have come down to 10.5% - 11.5% from 13.5% in 2010-11. Interest rates on loans to conventional and hydropower projects stand higher at 11.75% - 13.40%.
The Plans
Favouring the Green Sector
REC is considering raising the sole funding limit for wind and solar plants to Rs.250 cr per project from the present Rs.200 cr.
Repayment period of loans for these projects has been increased to 15 years from 10 years.
The moratorium period has been extended from six months to one year from the project's commercial date of operation.
Requirements for collateral security are scrapped.
Information
Helping renewable energy projects
Last financial year, REC sanctioned Rs.2,965 cr to renewable energy projects, while PFC sanctioned Rs.1,900 cr. REC was awarded by the renewable energy ministry for it's appreciable performance in financing of renewable energy projects in 2015-16.