REC Limited
REC Limited, formerly known as Rural Electrification Corporation Limited, is a Maharatna Central Public Sector Undertaking under the administrative control of India's Ministry of Power, operating as a non-banking financial company that specializes in providing long-term debt financing for power infrastructure projects across the generation, transmission, distribution, and renewable energy value chain.[1][2]
Incorporated on 25 July 1969 to function as the nodal agency for rural electrification programs, REC Limited has financed thousands of projects that enabled the electrification of over 600,000 villages and contributed significantly to India's goal of universal household electrification by 2018.[3][4]
In March 2019, Power Finance Corporation Limited acquired a 52.63% controlling stake in REC for approximately ₹14,500 crore, establishing it as a subsidiary while preserving its independent operations focused on cost-effective resource mobilization through market borrowings to support power sector development.[5] Headquartered in Gurugram, the company achieved a record net profit of ₹10,046 crore in fiscal year 2021-22, reflecting robust growth in its loan portfolio amid expanding infrastructure demands.[6][4]
Overview
Establishment and Core Mandate
REC Limited, originally incorporated as Rural Electrification Corporation Private Limited on July 25, 1969, under the Companies Act, 1956, emerged as a dedicated public financial institution to address India's rural electrification challenges. Established in the aftermath of severe famines and droughts in the 1960s, its formation responded to the critical need for extending power infrastructure to rural areas, thereby supporting agricultural productivity and economic development.[7][3] The core mandate of REC Limited centers on providing long-term financial assistance for power sector projects, with an initial emphasis on financing transmission and distribution networks to electrify villages and energize agricultural pump-sets. As a non-banking financial company under the Ministry of Power, it facilitates loans to state electricity boards, utilities, cooperatives, and private entities for generation, transmission, distribution, and renewable energy initiatives, prioritizing rural and underserved regions to promote sustainable energy access.[7][8] This foundational role has positioned REC as a key instrument in India's power infrastructure buildup, evolving from a rural-focused entity to a broader infrastructure financier while upholding its commitment to equitable electrification.[7]Ownership Structure and Navratna Status
REC Limited is a Central Public Sector Enterprise (CPSE) under the administrative control of the Ministry of Power, Government of India, with the government holding a majority stake of 52.63% in its equity shares as of September 2025.[9] [10] This promoter holding reflects direct government ownership, supplemented by institutional investors including foreign institutional investors (FIIs) at approximately 18% and domestic institutional investors (DIIs) at around 16%, with the remainder held by public shareholders.[11] In 2019, Power Finance Corporation Limited (PFC), another government-controlled entity under the same ministry, acquired the government's stake, positioning REC as a subsidiary while maintaining ultimate public sector control.[12] The company was granted Navratna status on May 5, 2008, by the Department of Public Enterprises, which provided enhanced financial and operational autonomy, including the ability to incur capital expenditure up to ₹2,000 crore without prior approval and form joint ventures.[13] This recognition was based on REC's consistent profitability, net worth exceeding ₹5,000 crore, and strong performance metrics over three years.[14] On September 21, 2022, REC was elevated to Maharatna status, the apex category for CPSEs, allowing even greater autonomy such as investments up to 15% of net worth in joint ventures or subsidiaries and mergers without government nod, subject to board approval. [15] The upgrade underscored REC's role in power infrastructure financing, with criteria met including a five-year average annual turnover exceeding ₹25,000 crore and significant contributions to national development.[16] As a Maharatna, REC operates with reduced bureaucratic oversight, aligning with government efforts to enhance efficiency in strategic sectors like energy.[1]Business Operations
Financing Products and Services
REC Limited's core financing products consist of long-term term loans designed for capital-intensive projects in the power sector, including generation based on conventional and renewable sources, transmission networks, distribution infrastructure, and rural electrification initiatives.[17] These loans are extended to a diverse borrower base, encompassing state electricity boards, central and state power utilities, independent power producers, rural electric cooperatives, and government entities, with repayment structures aligned to project cash flows and typically secured against assets or guarantees.[8][18] In addition to term loans, REC offers short-term loans to address working capital needs or bridge financing gaps in power and infrastructure projects, as well as equipment lease financing to facilitate procurement of machinery for generation and distribution assets.[18] Following diversification beyond power, these products have been adapted for non-power infrastructure sectors such as roads, metro rail, ports, airports, and logistics, with sanctions reaching ₹40,569 crore in fiscal year 2023-24 for such areas.[4] REC supports renewable energy financing through dedicated loan schemes, enabling projects like solar and wind installations, often integrated with green finance frameworks that allow for issuance of green bonds and loans to fund environmentally aligned initiatives.[19] The company's lending is complemented by ancillary services, including project appraisal, technical consultancy, and feasibility studies, ensuring comprehensive support from conceptualization to execution.[20] Interest rates and terms are competitively structured, drawing from REC's low-cost borrowings via domestic bonds, term loans, and international sources, to provide affordable capital to priority sectors.[17]Sectoral Focus and Portfolio
REC Limited primarily finances projects in the power sector, encompassing generation, transmission, and distribution, with a historical emphasis on rural electrification and a growing commitment to renewable energy initiatives.[21] Its portfolio supports India's energy infrastructure development, including conventional power generation (thermal and hydro), transmission networks, and distribution systems aimed at enhancing electricity access, particularly in underserved rural areas.[22] In recent years, REC has intensified focus on green infrastructure, aligning with national goals such as the 'Panchamrit' commitments for emissions reduction and renewable capacity expansion, including financing for solar, wind, and large hydro projects.[21] The company's loan portfolio reflects this sectoral concentration, with distribution forming the largest segment due to ongoing investments in grid strengthening and electrification schemes. As of March 31, 2025, REC's outstanding loans totaled approximately ₹4.99 lakh crore, distributed across key areas as shown below:| Sector | Outstanding Loans (₹ crore) |
|---|---|
| Power Generation (Conventional) | 1,55,071 |
| Renewables (incl. Large Hydro) | 57,994 |
| Transmission | 46,743 |
| Distribution | 2,20,626 |
| Infrastructure & Logistics (Core) | 18,448 |
Financial Performance and Metrics
REC Limited has demonstrated robust financial growth, primarily driven by its expansion in infrastructure financing, particularly in the power sector. In the financial year 2024-25 (ended March 31, 2025), the company reported a consolidated net profit of ₹15,713 crore, reflecting a 12% year-on-year increase from ₹14,146 crore in FY 2023-24.[23][24] Net interest income rose 27% to ₹19,878 crore, supported by higher disbursements and a growing loan portfolio.[25] The net worth expanded to ₹77,638 crore, bolstered by profit growth and recovery of ₹6,171 crore in non-performing loan assets.[23] The loan book, a core metric of operational scale, grew to ₹5.66 lakh crore as of March 31, 2025, up from ₹5.09 lakh crore the prior year, representing an approximately 11% expansion amid sustained demand for power and renewable projects.[25] In FY 2023-24, REC achieved record sanctions of ₹3.59 lakh crore, a 34% increase from the previous year, with disbursements reaching ₹1.61 lakh crore, the highest in its history.[26][27] Renewable energy sanctions within this totaled ₹1.37 lakh crore in FY 2023-24, highlighting diversification beyond traditional power transmission and distribution.[28] Key profitability metrics underscore efficiency in a high-interest environment: return on assets stood at 2.80% (trailing twelve months), with a profit margin of 72.73%, indicative of strong interest spreads on infrastructure loans.[29] Asset quality remained resilient, with net credit-impaired assets controlled through recoveries, though gross stage-2 loans showed some elevation to 5.7% by mid-2025.[25][30] Earnings per share for FY 2024-25 were ₹59.55 (basic and diluted), supporting a total dividend of ₹18 per share.[31][23]| Fiscal Year | Net Profit (₹ crore) | Loan Book (₹ lakh crore) | Sanctions (₹ lakh crore) | Disbursements (₹ lakh crore) |
|---|---|---|---|---|
| 2023-24 | 14,146 | 5.09 | 3.59 | 1.61 |
| 2024-25 | 15,713 | 5.66 | N/A* | N/A* |