REC gets RBI nod to set up subsidiary in GIFT City

REC Limited, a Maharatna central public sector enterprise and a leading NBFC providing finance to the power sector, has received a ‘No Objection Certificate’ from the Reserve Bank of India (RBI) for setting up a wholly owned subsidiary in the International Financial Services Centre (IFSC), Gujarat International Finance Tec-City (GIFT), Gandhinagar, Gujarat.

REC proposes to engage the new subsidiary in a range of financial activities, including lending, investment, and other financial services, within GIFT.

The decision to expand operations into GIFT is part of REC’s ongoing efforts to diversify its portfolio of services and enter new areas for growth, within and outside the country. 

REC will make use of the new business opportunities provided by the GIFT City platform to enter international lending activities and expand beyond the shores, CMD of REC Limited, Vivek Kumar Dewangan said.

State-owned REC Ltd has projected a compounded annual growth of 25 per cent in the next three years, which would take its net profit to more than Rs40,000 crore.

Meanwhile, brokerage firm CLSA said the Reserve Bank’s move to tighten provisioning norms for project financing will not have any impact on power sector financing companies like REC and PFC.

RBI’s draft guidelines propose to increase standard asset provisioning to 5 per cent over next three years and sets the minimum exposure of lenders in a consortium at 5 percent.