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PFC likely to approach foreign banks for fundraising to close REC deal, says report

PFC likely to approach foreign banks for fundraising to close REC deal, says report

PFC likely to approach foreign banks for fundraising to close REC deal, says report
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By CNBC-TV18 Dec 17, 2018 9:16:53 AM IST (Published)

Power Finance Corporation (PFC) is likely to approach foreign banks for raising a portion of funds required to buy out the centre's stake in REC as state-owned banks are likely to hit regulatory limits set on exposures to a single entity, Financial Express reported, citing senior bankers.

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The company, according to the report, had approached a number of state-owned banks for fundraising of the Rs 14,000-crore deal, which it plans to close by the end of January.
“The system already has anywhere between Rs 15,000 crore and Rs 20,000 crore of exposure to each of the two companies. If we were to be fulfilling the entire requirement, we would be overshooting both regulatory limits and our own internal limits,” a senior banker told the paper.
According to the norm set by Reserve Bank of India’s (RBI), a bank’s exposure to a single borrower will be capped at 15 percent of capital funds. The exposure to a single borrower can exceed by 5 percent only if the additional credit exposure is on account of the extension of credit to infrastructure projects.
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