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April 27, 2024
Introduction:
REC Ltd, a Maharatna Central Public Sector Enterprise (CPSE) and leading Non-Banking Financial Company (NBFC) under the Ministry of Power, Government of India, has successfully availed a green loan of Japanese Yen (JPY) 60.536 billion (approximately Rs 3,200 crore) to finance eligible green projects in India.
Green Loan facility Details
The green loan facility benefits from an 80% guarantee by SACE under their innovative Push Strategy programme.
- It makes SACE’s first JPY-denominated loan transaction and first green loan in India.
- The loan saw participation from banks across Asia, US and Europe, including Crédit Agricole CIB, Bank of America, Citibank, KfW IPEX-Bank and Sumitomo Mitsui Banking Corporation as Mandated Lead Arrangers.
- Credit Agricole CIB is acting as the ECA Coordinator, Green Loan Coordinator, Documentation Bank and Facility Agent.
Significance
- The loan aligns with REC’s Green Finance Framework and commitment to foster sustainable growth.
- It will support projects meeting rigorous environmental standards, promoting renewable energy and reducing carbon emissions in India.
- The transaction sets a benchmark for similar green financing deals in the Indian public sector.
- It enhances Indo-Italian business relationships in green energy financing.
About REC Ltd
- REC Ltd, formerly Rural Electrification Corporation Limited, was established in 1969.
- It finances and promotes rural electrification projects across India.
- REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.
- The company went public in 2008 and is listed on BSE and NSE.
- As of December 2023, REC had a loan book of Rs 4.97 lakh crore and net worth of Rs 64,787 crore.
India’s Green Energy Push
- India has set an ambitious target of achieving 500 GW of installed renewable energy capacity by 2030.
- Green bonds and loans are emerging as key instruments to finance the nation’s clean energy transition.
- In 2023-24, India’s issuance of green debt reached a record $25.7 billion, making it the second-largest green debt issuer after China.
- The government has also launched several initiatives like the National Hydrogen Mission and PLI schemes to boost domestic manufacturing of solar PV modules and Advanced Chemistry Cell batteries.
This is the first such collaboration between an Indian government entity and the Italian Export Credit Agency SACE.