REC Ltd., one of the biggest lenders to India’s power sector, is set to raise about $1 billion through term loans to help fund infrastructure projects, according to people familiar with the matter.

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The state-owned company’s fundraising via external commercial borrowing is split in two tranches, with the first expected to close this month amounting to $505 million, said the people, who asked not to be identified as the details are private.

The second tranche of $520 million is expected to be raised in August, as REC has applied to the nation’s central bank for approval, they said. Both parts have a five-year maturity and the margin is set to be 130 basis points over the Secured Overnight Financing Rate.

REC’s borrowings come as Prime Minister Narendra Modi, who faces national elections in early 2024, has made infrastructure core element of his nation-building agenda. A World Bank report last year estimated the country needs to spend $840 billion over the next 15 years on urban infrastructure to meet the needs of its fast-growing population.

The loan proceeds will be used to finance power, infrastructure and logistics projects, the people said. Lenders include Axis Bank.

The shares of REC are trading 1 percent lower on the exchanges at 2:50 pm on July 4.