PFC and REC to provide loans under liquidity infusion scheme

The Power Finance Corporation (PFC) and REC Limited have decided to offer loans at concessional rates to state distribution utilities under the Rs 900 billion liquidity infusion package to mitigate the impact of COVID-19 on discoms. PFC and REC have fixed interest rates at 8.75 per cent for three-year loans, 9 per cent for five-year loans, 9.25 per cent for seven-year loans and 9.5 per cent for 10-year term loans. The interest rates will be valid for the next 60 days. Discoms of states including Maharashtra, Telangana, Andhra Pradesh, Uttar Pradesh, Meghalaya, Jammu & Kashmir and Tamil Nadu have expressed interest in taking loans aggregating about Rs 600 billion. The central government is looking to tap the domestic bond market for supporting the Rs 900 billion loan scheme. The Life Insurance Corporation of India, the Employees’ Provident Fund Organisation, and state-owned banks are likely to be asked to subscribe to these bonds.