REC Ltd, a Maharatna central public sector enterprise under the Union Ministry of Power, recently announced that it will provide financial assistance of Rs 3,045 crore to Bangalore Metro Rail Corporation Ltd (BMRCL) for the establishment and development of metro lines as part of the phase-II project of Namma Metro.

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This move aims to enhance connectivity and alleviate traffic congestion in the densely-populated areas of Bengaluru.

Vivek Kumar Dewangan, CMD of REC, told CNBC-TV18 that the Ministry of Power has granted REC permission to diversify, allowing one-third of its loan book to be dedicated to non-power infrastructure and logistics. In line with this, REC sanctioned approximately Rs 16,000 crore for the Mumbai Metro projects managed by MMRDA last year.

"Recently, our board has approved financing of Bangalore Metro Rail Corporation for extension of two corridors of the phase one, that is east-west corridor and north-south corridor. And we are also taking up two new lines. This is definitely going to improve the connectivity and decongest traffic in the most populous portion of the Bangalore city," he added.

Expect AUM of` Rs 10 lakh crore by FY30

Dewangan further added that the company is expecting a subsequent improvement in the net interest margin (NIM).

"With regard to our asset under management (AUM), our total outstanding loan as on March 31, 2023 was about Rs 4,35,000 crore, which was a significant improvement of 13 percent on a year-on-year basis over the last year, and going forward, we are targeting to take up infrastructure projects as well as energy initiatives; and by the year 2030 we are targeting that our loan book will increase to about Rs 10 lakh crore," he said.

In FY24, REC is targeting an outstanding loan amount of at least Rs 4,80,000 crore.

Regarding REC's non-power AUM, Dewangan said it is current standing at approximately 1 percent of the overall AUM, equivalent to Rs 4,35,000 crore. However, he said this percentage is projected to grow in the near future, contributing to an increase in NIM to over 3.5 percent.

Net NPA to be zero by FY25

Dewangan also emphasised REC's commitment to asset quality, particularly in green projects. He noted a substantial improvement in net NPAs, which decreased to 1.01 percent in the last financial year.

In addition, the company successfully resolved six NPA projects worth around Rs 4,800 crore. In the current fiscal year, REC plans to resolve approximately nine stressed assets totalling Rs 7,000-8,000 crore, with the goal of becoming a net NPA-zero company by 2025, he said.

(Edited by : Shoma Bhattacharjee)

First Published:Jun 27, 2023 6:23 PM IST