REC Ltd's Green Loan Fuels India's Clean Energy Drive

REC Ltd's Green Loan Fuels India's Clean Energy Drive

REC Ltd, a prominent Maharatna Central Public Sector Enterprise (CPSE) and a leading Non-Banking Financial Company (NBFC) under the Ministry of Power, Government of India, has recently secured a substantial green loan in Japanese Yen (JPY) amounting to 60.536 billion (approximately Rs 3,200 crore). This financing endeavor aims to support eligible green projects across India, marking a significant milestone in the nation's sustainable development journey.

Details of the Green Loan Facility:

This green loan facility is backed by an 80% guarantee from SACE under its innovative Push Strategy program, marking SACE's debut JPY-denominated loan transaction and its first green loan venture in India. Noteworthy participation from various banks across Asia, the US, and Europe, including Crédit Agricole CIB, Bank of America, Citibank, KfW IPEX-Bank, and Sumitomo Mitsui Banking Corporation as Mandated Lead Arrangers, underscores the international interest and support for sustainable initiatives in India. Credit Agricole CIB assumes multiple roles in this transaction, including ECA Coordinator, Green Loan Coordinator, Documentation Bank, and Facility Agent.

Significance of the Loan:

Aligned with REC's Green Finance Framework and its commitment to fostering sustainable growth, this loan is poised to bolster projects that adhere to stringent environmental standards, thereby promoting renewable energy adoption and mitigating carbon emissions in India. Additionally, this transaction sets a precedent for similar green financing endeavors in the Indian public sector, while also nurturing Indo-Italian business relations in the realm of green energy financing.

About REC Ltd:

Formerly known as Rural Electrification Corporation Limited, REC Ltd was established in 1969 with a primary focus on financing and promoting rural electrification projects throughout India. Its scope of operations extends to providing financial assistance to various entities, including state electricity boards, government bodies, power utilities, independent producers, electric cooperatives, and private sector utilities. REC became a public entity in 2008 and is currently listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). As of December 2023, REC boasts a substantial loan book of Rs 4.97 lakh crore and a net worth of Rs 64,787 crore.

India's Green Energy Push:

India has set ambitious targets for renewable energy, aiming to achieve 500 GW of installed capacity by 2030. In line with this vision, green bonds and loans have emerged as crucial financial instruments to drive the nation's clean energy transition. The surge in green debt issuance in India, reaching a record $25.7 billion in 2023-24, underscores the growing momentum in this sector. Moreover, the government has launched several initiatives, including the National Hydrogen Mission and Production Linked Incentive (PLI) schemes, to bolster domestic manufacturing of solar PV modules and Advanced Chemistry Cell batteries, further propelling India's renewable energy agenda.